The Manmohan Singh government, which was so far gripped by policy paralysis on the economic front, is slowly stirring into some action as foreign investors have started to panic about the current account deficit and the falling rupee
The United Progressive Alliance (UPA) government, finally seems to have woken up to the reality of the worsening economic situation, made worse due to the falling rupee, rising current account deficit (CAD) and concerns over withdrawal of funds by foreign institutional investors (FIIs). While the Cabinet Committee on Economic Affairs (CCEA) came up with several measures, finance minister P Chidambaram tried to calm the nerves over the domestic currency that touched a lifetime low on Thursday.
The CCEA on Friday approved the proposal to replace highway developers, for both on-going and completed projects. This was a long-pending proposal from developers as well the National Highways Authority of India (NHAI) for allowing exit for cash-strapped developers. The developer can now be replaced by other with deeper pockets.
During FY2011-12, the NHAI and the ministry of highways awarded projects of 8,000km. However, the next year, the same figure came down sharply to 787km, a level last seen during the 2008-09 global slowdown. Even after repeated bids, many projects failed to get any response from developers.
In addition, large number of projects awarded during FY12 are yet to achieve financial closure. Developers are facing severe shortage of equity and consequently, as they are unable to raise required debt, there was poor response to public-private partnership (PPP) projects. To revitalise the sector, there is an imperative need for industry to raise fresh equity. Innovative ways of infusing equity was the need of the hour without compromising on due diligence and safeguarding public interest.
The decision to allow cash-strapped developers to exit from the project would allow entry of a financially healthier one instead of declaring the project a non-performing asset (NPA).
Speaking with reporters, finance minister P Chidambaram said, “We hope, with this, a number of stalled (road) projects, can now move forward.”
The CCEA also approved the proposal for the continuing the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) in the XII Plan with minor changes to complete the ongoing or in pipeline projects in order to meet the objective and scope of the XI Plan R-APDRP. The programme size is Rs51,577 crore. Initially, the government and financial institutions would provide Rs50,000 crore. Out of the government’s grant of Rs31,577 crore, it has already released Rs5,697 crore, while Rs10,830 crore would be released during the 12th Plan.
The Cabinet Committee also cleared the proposal from the food ministry to offload 10 million tonnes (mt) of wheat and 0.5mt of rice from the godowns of Food Corporation of India (FCI). These foodgrain would be sold in the open market to control spiralling retail prices of wheat and rice. FCI has a stock of 77 mt of foodgrain against its storage capacity of around 74 mt.
The CCEA, which earlier this month had deferred a decision, on Friday cleared 5% stake sale in Neyveli Lignite (NLC), out of its holding of 93.56% through an offer for sale. This would help the government to garner about Rs466 crore, based on today's trading price of Rs59.8 per share of the company. The stake sale has become necessary following the August 2013 deadline given by market regulator Securities and Exchange Board of India (SEBI) to have a minimum 10% public shareholding in all public sector units (PSUs).
According to the Reserve Bank of India (RBI), the country’s macro-economic conditions remain weak. Growth concerns continue, due to a “soft patch” in the global economy and the continued slowdown in the domestic manufacturing sector. The recent drop in inflation is largely along the RBI’s expected lines and it expects the inflation outlook to be determined by minimum support prices, monsoon progress and rupee depreciation. On the external front, the RBI expects softer commodity prices and lower gold imports to moderate the current account deficit in FY14 (year ending March 2014), but financing the deficit remains a near-term challenge.
HDFC Life had refused to share all the reports except Cotinine for some policyholders under the argument that they had revised non-medical limits at the same time the customer took medical tests. It has now shared the report of another policy holder after Moneylife represented
Moneylife Insurance Helpline received the following email from Amit Kumar Mishra, “I am 31 years old. I went for Rs80 lakh term plan HDFC Life Click2Protect after cancelling the Rs75 lakh Click2Protect term plan under the condition that they will conduct a complete health check-up. In the hospital we went through several tests, but only the urine cotinine test details were available on insurer’s website. When I asked them why all details were not available, the manager said only the urine cotinine test was required and they did not collect all reports from the hospital. I have sent the reminders to the manager for uploading all the reports but still it has not been uploaded. My friend Uttam Dubey got the reports uploaded after the follow up and intervention from Moneylife helpline. Even after referring the case of Mr Dubey, HDFC Life has not uploaded the reports for me.”
It’s strange that same issue was reported by Uttam Dubey earlier. Moneylife intervention had helped to ensure HDFC Life share all the reports to Mr Dubey. In the case of Mr Mishra too, HDFC Life shared the report within one week of Moneylife taking up the issue. The insurer gave us the same argument about them revising non-medical limits at the same time the customer took medical tests.
Many customers of HDFC Life were made to undergo the tests but the reports never shared with them, because HDFC Life changed the non-medical limits at the same time. Here is the response from HDFC Life, which is identical in both the cases: “We keep revising our non-medical limits from time to time based on actual experience. Most of the times, we revise the non-medical limits and give the benefit of the revised limits to the proposals, which are pending for conversion. We had changed the non-medical limits just when Amit Kumar Mishra went for the medical examination. The centre had collected the samples and done the reports. However, as we had informed them of the revision in the non-medical limits, they only forwarded the Cotinine test report to us, on the basis of which we went ahead and converted the proposal. As the Cotinine test was the only medical test required for the conversion of Amit Kumar Mishra's policy because of the revision in non-medical limits, we had uploaded only that report. On receipt of the complaint, we have checked with the centre if they could produce the other reports, which they had retained at their end. We have now uploaded all the reports, which Amit Kumar Mishra can view at his end.”
The airport project contract awarded to GMR for modernising and operating the Ibrahim Nasir International Airport, signed in 2010 during the previous regime of Mohamed Nasheed, was ‘unilaterally’ terminated by the current government on 27th November last year
Indian infrastructure major GMR today sought a compensation of $1.4 billion from Maldives for the “wrongful termination” of its 25-year contract to develop and operate the Male International Airport.
The claim was today filed before an Arbitration Court in Singapore and a final order in the matter is likely to come out by end of March next year.
The figure of $1.4 billion was reached after taking into account loss of profit, payments made to sub-contractors besides others.
Sources said the arbitration process will go on and the Maldivian government along with the Maldivian Airport Company, both parties in the suit, will give their responses.
The over $500 million airport project contract awarded to GMR for modernising and operating the Ibrahim Nasir International Airport (INIA), signed in 2010 during the previous regime of Mohamed Nasheed, was ‘unilaterally’ terminated by the current government on 27th November last year.
The airport was taken over by the Maldives Airports Company after a high-voltage legal tussle in which GMR had initially got a stay order on the termination from the Singapore High Court.
However, the Singapore Supreme Court ruled on 6th November, a day before the notice period expired, that Maldives has the power to take over the airport on 6th November.
The abrupt termination of the contract had raised tempers between India and Maldives which had till then said it will go for an amicable solution to the airport issue.
Various political parties, all coalition members of the current regime headed by president Mohamed Waheed, had carried out a series of protests and campaigns against the Indian company.
The Maldivian government’s stand was that the contract was terminated because it was “void ab initio” (invalid from the outset) and hence the government does not have to bear any compensation for the termination.
Earlier this week, Maldives’ anti-graft watchdog had ruled out any corruption in the leasing of the international airport to GMR.
However, the government had said, “The report does not change the government stand that the contract given by former president Mohamed Nasheed was illegal.
“The contract was not terminated on the ground that there was corruption but because it was done against the law of the land.”