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A Group of Ministers on civil aviation, headed by finance minister Pranab Mukherjee, is likely to meet on 9th February to debate on major issues like allowing foreign carriers to have a stake in domestic airlines and sales tax on jet fuel
New Delhi: A proposal to allow foreign airlines to pick up equity in Indian carriers is likely to be introduced before the Budget Session of Parliament, reports PTI quoting civil aviation minister Ajit Singh.
A Group of Ministers (GoM) on civil aviation, headed by finance minister Pranab Mukherjee, is likely to meet on 9th February to debate on major issues like allowing foreign carriers to have a stake in domestic airlines and sales tax on jet fuel.
“We are preparing the proposal (on investments by foreign airlines). It would be sent to the commerce ministry and from there to the Cabinet,” Mr Singh told reporters here.
Asked whether a decision would be taken before the Budget Session, he said “I hope so.”
Regarding slashing of sales tax on aviation turbine fuel (ATF), Mr Singh said “I have talked to the finance minister. The matter was to come up before the GoM on Tuesday. Now the question will come up for discussion on 9th February.”
Currently, the government allows foreign direct investment (FDI) up to 49% in Indian carriers by non-airline players but bars foreign airlines from investing in them, primarily due on security grounds.
During a meeting Mr Singh had with Mr Mukherjee earlier this month, the government had agreed for the first time to draft a cabinet note proposing 49% cap on FDI by foreign carriers in domestic airlines.
The civil aviation ministry had proposed 24% cap while the commerce ministry’s Department of Industrial Policy and Promotion (DIPP) had suggested a 26% limit.
Owing to high jet fuel and interest costs, three major private airlines—Kingfisher, Jet Airways and SpiceJet—have reported heavy second quarter losses.
Asked about Kingfisher promoter Vijay Mallya’s proposal on state governments underwriting or buying seats in flights of Air India or other private carriers, Mr Singh said, “He (Mallya) has asked the states. It is a federal system. He has requested the state governments; let us see what they say.”
The minister further commented, “If I reply, will (West Bengal chief minister) Mamata (Banerjee) accept my statement?”
Giving details about CRIS, chief economic advisor Kaushik Basu said major credit ratings agencies provide the sovereign credit rating of each nation as an absolute grade. How other nations fare does not matter in a particular nation’s rating score
New Delhi: Investment prospects in India have improved in the past five years as per CRIS, a new index developed by the finance ministry for comparison of various countries’ sovereign ratings using Moody’s ratings, reports PTI.
“India’s score has risen from 66.47 in 2007 to 69.83 in 2011. In other words, in relative terms, India has become a better investment destination by 5.06%,” chief economic advisor Kaushik Basu told reporters after unveiling the ‘Comparative Rating Index of Sovereigns (CRIS)’ here.
India’s rank in terms of CRIS moved up from 61st position in 2007 to 55th in 2011. The improved score is partly due to the decline in scores of some European nations, leading to deterioration of the world average by over 4.8%.
“Since for investors, relative or comparative rating is such an important concept, it was felt that we ought to develop a new index which captures precisely this idea,” he said, adding that CRIS would be a periodic feature.
The index is based on the ratings of global agency Moody’s and data on the gross domestic products (GDPs) of 101 nations given by the IMF.
Going forward, the ratings of other major rating agencies like S&P and Fitch might be used for CRIS.
Paraguay, Indonesia and Peru were the countries that registered the maximum increase in their ratings between 2007 and 2011, as per CRIS, while Portugal, Ireland and Pakistan witnessed the biggest fall in the index.
“The index uses external data on GDP and ratings combined in terms of pure mathematical and statistical methods without interventions or interpretations,” Mr Basu added.
The formula used for calculating CRIS would be made public at a later stage, he said, adding, “We did some research... We believe we are the first (to develop such an index).”
Giving details about CRIS, the CEA said major credit ratings agencies provide the sovereign credit rating of each nation as an absolute grade. How other nations fare does not matter in a particular nation’s rating score.
“When an investor searches across nations for a place to put her money, the relative rating of nations is important...
(it is entirely possible) a particular nation that has had no rating change may now be better off or worse off in comparative terms,” Mr Basu added.
Also, a nation that has travelled down the rating ladder in absolute terms may be, in relative terms, better off because others have done even worse, he said.
As per CRIS, the score for Greece has dropped sharply from 74.24 in 2007 to 13.97 in 2011— a decline of 81%—while that of Ireland and Portugal has fallen by more than 14%.
As per CRIS, the US has seen its score rise from 78.20 to 81.81.
“Ironically, this is accompanied by a loss of rank from the top of the chart to the 16th position. This shows that CRIS is distinct from a percentile score, which is also a relative measure of status,” Mr Basu added.
In 2007, the first rank was shared by 20 economies, but by 2011, the number of countries occupying the top slot had shrunk to 15.
China’s index value increased by 7.3% in the 2007-2011 period while Brazil saw its value increase by 11.8%, Russia witnessed a 7.5% rise and South Africa’s score rose by about 5.79%.
“All the BRICS had improvements in rank as well as index value,” Mr Basu added.