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Rajasthan government on Tuesday said the kits were giving inaccurate results

In focus: Health workers collecting samples using the rapid antibody testing kits in Chennai.B. Velankanni Raj

The Indian Council of Medical Research (ICMR) on Tuesday directed the States not to use the COVID-19 rapid testing kits for the next two days following reports of wide variations in results.

The kits would be tested and validated by ICMR teams and an advisory issued in the next two days. If they were found to be not up to the mark, replacements would be sought from the manufacturers, ICMR spokesperson Dr. R.R. Gangakhedkar said.

The Rajasthan government on Tuesday decided to halt rapid antibody tests after an experts’ team questioned the use of the newly distributed Chinese kits following inaccurate results.

Chief Minister Ashok Gehlot said at a videoconference with journalists in Jaipur that since his request to Prime Minister Narendra Modi a fortnight ago to carry out centralised purchasing of medical equipment was not heeded, the kits of inferior quality had been supplied to the States. “This has seriously hampered our efforts to get fast test results for starting the treatment and contain the spread of the virus.”

Rajasthan Health Minister Raghu Sharma said, “We did rapid tests on 168 confirmed cases but only 5.4% tested positive for antibodies. The majority of the confirmed cases tested negative.”

The ICMR said of the total COVID-19 tests conducted so far, 69% were asymptomatic cases and 31% symptomatic.

India on Tuesday registered over 1,336 new cases in the past 24 hours, taking the total number to 18,985. The total number of deaths stood at 603, while 3,259 people have recovered so far. The country has registered a recovery rate of 17.48%, the Health Ministry said.

Reports from the States put the death toll at 646, with 15,498 active cases out of a total of 20,004 cases.

Dr. Gangakhedkar said 80% of cases came with no symptoms or very mild symptoms, 15% with moderate symptoms and 5% needed ICU aid.

“Four districts — Mahe [Puducherry], Kodagu [Karnataka], Pauri Garhwal [Uttrakhand] and Pratapgarh [Rajasthan], have not reported any fresh cases in the last 28 days. There are now 61 additional districts from 23 States/UTs that have not reported any fresh cases in the last 14 days,” said Lav Agarwal, Joint Secretary, Health Ministry.

Letter sent to I-T officials last week reiterates personal income tax, corporation tax goals

Even as the COVID-19 pandemic and the lockdown to combat it has brought the economy to a near standstill, the Centre has gone ahead and set its Income Tax authorities a daunting target of collecting ₹13.2 lakh crore for the fiscal year ending in March 2021.

In a correspondence to all Principal Chief Commissioners of Income Tax (PCCIT) dated April 16, the Central Board of Direct Taxes (CBDT) has spelt out zone wise targets for the collection of corporate tax, personal income tax and security transaction tax (STT).

The figures, which are a reiteration of the revenue receipt estimates spelt out by Finance Minister Nirmala Sitharaman in the Union Budget presented in February, comrprise a corporation tax component of ₹6.81 lakh crore, personal income tax of ₹6.25 lakh crore and STT at ₹13,000 crore.

“The budget target of each cadre controlling PCCIT has been fixed keeping in view the revenue potential of each region, which is based on the weighted average growth rate of net collections of last three years, giving highest weight to the immediately preceding year,” the CBDT said in its letter. After the budget, Revenue Secretary Ajay Bhushan Pandey had said that a budgeted 12% growth in tax collections may look ambitious to some but was achievable in an economy projected to clock a 10% nominal GDP growth.

However, the pandemic has emerged as the single biggest challenge to the economy and the IMF earlier this month cut its projection for India’s annual GDP growth in the current fiscal year to 1.9%, from an earlier forecast for a 5.8% expansion.

A senior income tax officer confirmed having received the CBDT letter with details of zone wise targets but declined to comment on whether the target was achievable. “You see the current environment and judge for yourself,” quipped the official, who spoke on the condition of anonymity.

Several tax consultants told The Hindu that the Revenue Department and the CBDT would have little choice than to revise downward the zone wise targets handed out to the tax bureaucracy.

“No way it can be achieved in such a challenging environment with a variety of factors like the massive hit to the economy and massive lay-offs of employees in the corporate sector,” a top tax expert from Ahmedabad said, declining to be identified.

Another expert from Mumbai said that the personal income tax collection would be affected hugely because most of the companies had cut salaries of employees or sent the employees on furlough (leave without pay). “All airlines, hospitality companies and several others have cut salaries and sent the employees on rotation basis on furlough, so that will hit the tax collections very badly,” he added.

An entrepreneur running a mid-size manufacturing unit in Ahmedabad even expressed apprehensions of “tax terrorism” if the Ministry of Finance did not revise the targets given to the field offices of the tax department. “I sincerely hope the government will have a second look at the figures, otherwise field officials will go aggressive targeting businessmen and corporates,” he added.

It will be administered to 50 patients at AIIMS and PGIMER

Race for cure: Existing drugs are being used in trials to fight COVID-19.

Can a drug used to treat severe sepsis be deployed for critically ill COVID-19 patients?

Sepsivac, a drug jointly developed by the Ahmedabad-based Cadilla Pharmaceuticals and the Council for Scientific and Industrial Research (CSIR), will be tested in 50 COVID-19 patients at the All-India Institute of Medical Sciences in Delhi and Bhopal, and Post Graduate Institute of Medical Education and Research, Chandigarh.

Results from a human trial are expected in the next two months, Ram Vishwakarma, Director, Indian Institute of Integrative Medicine, Jammu, told The Hindu. IIIM is a CSIR laboratory and was involved in the early development of Sepsivac.

Sepsivac was originally developed for treating sepsis by a class of pathogens called gram negative bacteria, that are known to cause life-threatening infections. Given the similarities in the immune-system response in critically ill COVID-19 patients, it is theorised, the therapy could stimulate a benign response.

A large quantity of cytokines, chemicals signalling the presence of an infection, are produced in the early stages of the body’s response against an infection to stimulate the production of antibodies.

However, cytokines also cause inflammation of organs and can be counter-productive in protecting the body.

Keeping them in check is the goal of so called immuno-modulators, or medicines like Sepsivac.

“The advantage is that we have a ready made product and can be put into trials. We already have an approval for phase-3 [large trials] and can be scaled up if it shows promise,” Dr. Vishwakarma added.

The drug uses the Mycobacterium w (formally known as mycobacterium indicus pranii) as it produces a different immune-system response.

Previous randomised trials in sepsis patients showed 11% absolute reduction and 55.5% relative reduction in mortality.

Sepsivac reduces the days on ventilator, in ICU and hospital and incidence of secondary infection, Cadilla Pharmaceuticals have claimed on their website.

Sellers have to pay buyers to get rid of their crude, an unprecedented situation

The story so far: Prices of West Texas Intermediate (WTI), the American benchmark for crude oil, fell to less than zero in Monday’s trade. The price of a barrel of WTI fell to minus, yes, that’s right, minus $37.63 a barrel. What this means is that sellers have to pay buyers to get rid of their crude! This is unprecedented in the oil market, even accounting for its notoriety for being volatile.

Why did prices fall like this?

We need to understand a bit of oil market and trading dynamics here. WTI oil is traded as futures contracts in the NYMEX (New York Mercantile Exchange) where traders buy and sell monthly futures such as, for instance, May futures, June futures and so on. The sellers of such futures will have to deliver a barrel of crude oil at the contracted price in the contracted month just as buyers will have to take delivery at the contracted date.

As with all trading in commodities, there’s a huge speculative participation in oil futures trading too. So speculators buy and sell contracts with no intention of taking delivery (in the case of buyers) or offering delivery (in the case of sellers) of the physical oil, on the contracted date. These speculators have to unwind their “positions” on the contract expiry date. If they fail to do so, they will have to take physical delivery of the crude oil on the contracted date.

What happened on Monday was that speculators who had taken large bets on May futures began to unwind their “positions”. This was because the futures contracts are set to expire today, Tuesday. Those not intending to take physical delivery have to square off their contracts before the expiry date. So, speculators who did not want to take delivery in May proceeded to unwind their “positions,” leading to the massive fall in prices.

It could be that these were financial speculators who never take physical delivery and hence closed their contracts. Or, these could also be delivery-based traders backing out as the bottom has fallen off demand for oil. In reality, it would be a combination of both categories of traders. The bottomline, though, is that prices fell as demand for oil is falling and the world, especially America, is running out of storage space.

May WTI futures prices went negative but June futures prices are still at $20.43 a barrel. Why?

This could be due to two reasons. Traders expect demand to recover by June as lockdowns are lifted across the world and economic activity resumes. Second, traders also expect that storage space may be created as existing inventory is drawn down. America is also talking of adding to their strategic storage by taking advantage of the low prices. This could create demand for oil. Finally, contract expiry for June contracts is still a few weeks away, giving speculators that much more time to speculate.

Market reports talk about contango trades in the oil market. What do they mean?

Simply put, contango kicks in when prices of a commodity in the futures market are considerably higher for deliveries many months later, compared to prices for immediate delivery. For instance, while May oil futures are negative and June is at $20.43 a barrel, November futures for the same grade of oil ended at a hefty $31.66 a barrel on Monday. Contango trades happen when traders anticipate a surge or rise in demand and value the commodity higher for the future.

So, why can’t traders buy cheap oil now and store them for release in future when demand and prices rise?

That’s exactly what traders are now doing. Such a practice became famous during Iraq’s invasion of Kuwait in 1990 when a trader took massive positions at cheap prices ahead of the invasion and sold them when prices rose after the invasion. Oil was stored in tankers floating on the sea and unloaded at considerably higher prices. Traders are doing the same now. Year-long hiring contracts for VLCC (very large crude carriers) that can store up to 2 million barrels of oil are soaring through the roof. According to a report in the Wall Street Journal, VLCC hiring charges for year-long contracts are now at $72,500 a day, compared to $30,500 a day a year ago.

The prices of Brent grade are still at $20.58 a barrel for May futures. What’s the reason for the difference?

Brent oil has traditionally quoted higher than WTI with the gulf being about $6-7 a barrel between the two. Brent is a superior grade produced in the North Sea off the British coast and is the accepted benchmark for this part of the world. The market that it serves is considerably larger than that of the United States and demand is, therefore, higher. Transporting oil from the U.S. to Asia is not economical thus limiting the scope for the WTI grade. Refineries in Europe are configured for Brent rather than WTI. Prices of Brent are therefore always higher than that of WTI. Importantly, unlike WTI futures on NYMEX, Brent futures traded in London can be settled by cash when the contract expires. In other words, a trader who has bought oil for May delivery is not forced to take physical delivery of the oil but can settle the contract in cash. This big difference between WTI and Brent has ensured that Brent futures will not crash like that of WTI.

How is India benefiting from this price crash?

In two ways. First, the oil import bill will fall sharply this fiscal year, giving tremendous relief to the government on the external account front. With merchandise exports from India badly hit due to the lockdown in the West, foreign exchange earnings are under pressure. With oil prices falling and foreign exchange outgo reducing, the pressure on the current account balance is off. In fact, we may be looking at a positive balance in the current account if global economic recovery is quick and our exports recover. Second, India is quietly building up its strategic reserves, taking advantage of the cheap prices. India has a capacity to hold over 39 million barrels of oil at its strategic reserves in Visakhapatnam, Mangalore and Padur, near Udupi. These are underground salt caverns converted and built to store crude oil.

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