Citizens' Issues
CIC pulls up Air India subsidiary for defying order

Alliance Air refused to give information on former minister’s daughter’s travel with IPL team despite a previous ruling

The Maharaja has long lost his sheen. Yet, he refuses to speak of those who robbed him. The Central Information Commission (CIC) has pulled up national carrier Air India once again, this time for refusing disclosure despite an order on 23rd February 2011. It has issued a show-cause notice to an official of its subsidiary Alliance Air. The low-cost subsidiary refused to provide complete information on a flight which was pulled out less than 12 hours before its scheduled departure, in order to transport former civil aviation minister Praful Patel’s daughter Poorna and some IPL players to Chennai.

Central Information Commissioner Ms Sushma Singh said in the ruling dated 20 January 2012, “The commission observes that Arun K Goyal, PIO/company secretary, Alliance Air has only partly complied with the directions of the CIC contained in the order dated 23 February 2011. The CPIO is hereby directed to provide complete information to the appellant and to show cause why a penalty of Rs25,000 should not be imposed on him for causing a delay of more than 100 days in providing the information to the appellant.” The CIC has asked the CPIO to provide all requested information within 15 days of receipt of the order.

Mr Agrawal, who had sought the information about the flight, said, “After clear instructions from the honourable CIC in the matter, no exemption clause apply. But the CPIO, after seeking time to respond, ultimately declined the sought information and documents as exempted under section 8(1)(d) of RTI Act. This is an unnecessary tactic to harass RTI petitioners.”

On 20 April, 2010, the Delhi-Coimbatore Air India flight IC 7603 which was scheduled to leave at 5:20am, was suddenly aborted. The reason, allegedly, was to use the aircraft as a chartered flight for taking then civil aviation minister Mr Patel’s daughter, Poorna Patel, and some IPL players from Chandigarh to Chennai. Subsequently, Air India clubbed the 5:20 flight with a later one.

Legally, it is forbidden to divert a scheduled passenger flight aircraft for charter purposes, if the airline does not have an aircraft to use as the scheduled flight. Ms Poorna Patel, IPL’s hospitality manager, called the airline, and got her request granted. The aircraft belonging to Alliance Air was pulled out of the fleet.

Air India later said that the diversion was made after a request by India Cements, owners of the Chennai Super Kings team. The chartered flight came back to Chandigarh empty while the Coimbatore-bound passengers reached their destination at 11:45am, three hours late.

Mr Agrawal had filed a Right to Information (RTI) petition on 26 April 2010 asking for detailed file notings, documents and related correspondence. The CIC ruled in his favour on 23 February 2011 and ordered the CPIO to disclose complete information. However, on 22 March 2011, Alliance Air replied to Mr Agrawal saying that the information is commercially sensitive, and hence claimed exemption to the disclosure.

On 26 March, 2011 Mr Agarwal filed a fresh query, asking for the same details. Finally, on 18 May 2011 the CPIO declined disclosure, claiming exemptions. Mr Agrawal then complained before the CIC citing non-compliance on behalf of the national carrier.

Air India had earlier refused to give information about a carrier allegedly diverted for Mr Patel’s other daughter. Read The lawmakers, it seems, have no trouble getting the Maharaja to dance to their tunes.


RBI asks government to free diesel prices

“As the food subsidy bill is expected to rise, it will be prudent to fully deregulate diesel prices to contain both aggregate demand and the trade deficit,” the RBI said in its third quarterly monetary policy review

Mumbai: The Reserve Bank of India (RBI) today said the government should deregulate diesel prices in order to contain the trade deficit, which is expected to widen to $160 billion during the current fiscal, reports PTI.

“Particularly, as the food subsidy bill is expected to rise, it will be prudent to fully deregulate diesel prices to contain both aggregate demand and the trade deficit,” the RBI said in its third quarterly monetary policy review.

While petrol prices are market-linked, the government decides the rates of LPG, kerosene and diesel, which usually results in a large budgetary expenditure on subsidies.

The central bank further said the current levels of domestic prices of petroleum products do not reflect international prices.

“Petroleum product prices have also not been revised in response to crude oil prices, contributing to both fiscal slippages and suppressed inflation. Revision in domestic administered prices will add to inflationary pressures, although such revisions are necessary to maintain the balance between supply and demand,” the RBI said.

According to the financial stability report (or FSR) of the RBI released earlier, the December trade deficit gap for the year would broaden from $155 billion to $160 billion, a significant rise from $104.4 billion in the previous year.

It is estimated that the higher expenditure on petroleum subsidy could drive up the fiscal deficit by around 0.8 percentage points of the gross domestic product (GDP) for 2011-12.

The government had fixed the fiscal deficit target for the current fiscal at 4.6%.

“If the increase in government borrowing already announced is an indication, the gross fiscal deficit for 2011-12 will overshoot the budget estimate substantially,” it said, adding that the increase in fiscal deficit could potentially crowd out credit to the private sector.

“Moreover, slippage in the fiscal deficit has been adding to inflationary pressures and it continues to be a risk for inflation,” it said.

The RBI has injected Rs32,000 crore into the system by lowering the Cash Reserve Ratio (CRR) by half-a-percentage point today, but kept the short-term lending rate unchanged in view of persisting inflationary concern.

It has also revised the GDP growth projection for 2011-12 downward to 7%.


No change in EMIs; banks to have more funds

Dena Bank executive director AK Dutt said, “Softening of CRR would lead to five basis point reduction in cost of deposits. However, it would not have any impact on the interest rates”

Mumbai: There is no immediate respite to home, auto and corporate loan borrowers in terms of their monthly equated instalments (EMIs) but with the Reserve Bank of India (RBI) reducing the cash reserve ratio (CRR), banks will have more money to lend, reports PTI.

After the Reserve Bank unveiled the third quarterly review of the monetary policy, several bankers said that they may not go in for rate cut immediately.

However, a few like Oriental Bank of Commerce executive director SC Sinha said the CRR cut would “definitely lead to reduction in interest rates.”

Chairman of the Prime Minister’s Economic Advisory Council and former RBI governor C Rangarajan said that as the primary injection of Rs32,000 crore liquidity (through CRR cut to 5.5% from 6%) would have a multiplier effect, the interest rates would soften.

“The improvement in liquidity condition will automatically have effect on the interest rates. It would lead to softening of interest rates,” he said.

CRR is the percentage of bank deposit that lenders have to keep with the RBI. The new rate would be effective from 28th January.

Since March 2010, the retail and corporate loans have become expensive for the borrowers but the fixed deposit holders had benefited from the 375 basis point hike in the short-term lending rate by the RBI.

Canara Bank executive director AK Gupta said banks would now get much-needed liquidity. This will also allay fears of further hike in base rate.

“Probably, interest rates may not come down immediately,” he said, adding, the banks will, however will have more cash at their disposal.

Concerned over upside risk on inflation, the RBI, however, kept policy rate unchanged.

The RBI opted to keep the repo rate, at which it lends to the banks, unchanged at 8.5%, compelled by the worsening global economic outlook and decelerating domestic growth.

Reverse repo (rate at which the RBI borrows from banks) is also kept at 7.5%.

RBI itself said that “CRR is the most effective instrument ... the reduction can also be viewed as a reinforcement of the guidance that future rate actions will be towards lowering them.”

Bank of India executive director N Seshadri said, “I don’t think with the CRR, there would be a reduction in base rate and definitely rate cut would happen when repo rate is reduced.”

Expressing similar view, Dena Bank executive director AK Dutt said, “Softening of CRR would lead to five basis point reduction in cost of deposits. However, it would not have any impact on the interest rates.”

RBI governor D Subbarao said in a statement, “In reducing the CRR, the Reserve Bank has attempted to address the structural pressures on liquidity in a way that is not inconsistent with the prevailing monetary stance.”

“Based on the current inflation trajectory, including consideration of suppressed inflation, it is premature to begin reducing the policy rate.

“However, the persistence of tight liquidity conditions could disrupt credit flow and further exacerbate growth risks.

In this context, the CRR is the most effective instrument for permanent liquidity injections over a sustained period of time,” Mr Subbarao said.


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