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Macro Economic Update: 

The Goods and Services Tax Council (GST) kept tax on COVID-19 vaccines and medical supplies unchanged. However, the council exempted duty on import of a medicine used for treatment of black fungus. The GST council also to provide relief to small tax players recommended an Amnesty Scheme to reduce late fee payable. The move is expected to provide relief to small tax players who constitute 89% of GST players. 

* Government data showed that India’s Foreign Direct Investment (FDI) equity inflows during the period from Apr 2020 to Mar 2021 stood at $59.64 billion which corresponds to a growth of 19%. U.S. replaced Mauritius as the second largest source of FDI into India during FY21 with inflows of $13.82 billion. Singapore was the top source of FDI equity into the country for the third consecutive fiscal at $17.42 billion.

* The Reserve Bank of India stated that its monetary policy will continue to support growth until it recovers on a long-term basis. The impact of the second wave of COVID-19 infections, according to the central bank, will be limited to the June quarter, with some overflow into July. 

* According to RBI’s annual report, the rise in domestic assets despite an expected 8% reduction in FY21 GDP raises the possibility of a bubble. The rising gap between stretched asset prices and prospects for recovery in real economic activity has arisen as a worldwide policy worry, according to the RBI, which suggests that once the epidemic waves have flattened and the real economy is firmly on a recovery path, a measured unwinding of stimulus should be considered..