Fiscal discipline, productivity improvement, and petroleum pricing reforms are the three key steps to pull the Indian economy out of the high-inflation trap, Crisil’s report titled ‘Putting a lid on inflation’ said
New Delhi: In order to control inflation, the government should come out with a credible roadmap for reducing fiscal deficit in the forthcoming Budget, reports PTI quoting rating agency Crisil.
“To reduce and stabilise inflation, the Budget 2012-13 needs to lay out a credible roadmap to cut the fiscal deficit-GDP (gross domestic product) ratio by restraining consumption expenditure,” said the report titled ‘Putting a lid on inflation’.
It added that creating a fiscal space through expenditure reforms would enable the government to invest in agriculture as well as infrastructure, where supply is deficient.
Fiscal discipline, productivity improvement, and petroleum pricing reforms are the three key steps to pull the Indian economy out of the high-inflation trap, it said.
Headline inflation fell to an over two-year low of 6.55% in January, after remaining in double digits for most of 2010 and 2011.
Finance minister Pranab Mukherjee, in his Budget to be presented in the Lok Sabha on 16th March, is expected to announce steps to contain deficit which during the current fiscal is likely to exceed the estimate of 4.6% of GDP.
As regards inflation, Crisil said, it has been high in the last six years on account of adverse shocks from shortfall of food items and rise in fuel and commodity prices.
“The supply shocks had a lasting impact and inflation became persistent, as the government policy increased consumption demand but did not do enough to improve supplies through investments,” it added.
The current pricing regime for petroleum fuels not only increases subsidy burden but made retail price adjustments sharp and unpredictable.
“Aligning international and domestic prices of petroleum fuels will reduce the surprise element of abrupt changes in administered prices. This will not only cut the subsidy burden but also rationalise demand for these products,” Crisil chief economist Dharmakirti Joshi said.
“There were about four issues which came up for resolution before the EGoM and three of them have been resolved fully. Basically the issues were relating to the 700 Mhz band those have been resolved,” telecom minister Kapil Sibal told reporters
New Delhi: An Empowered Group of Ministers (EGoM) on Monday decided to allocate 700 Mhz spectrum band for offering fourth generation or 4G telecom services, reports PTI.
“There were about four issues which came up for resolution before the empowered committee and three of them have been resolved fully. Basically the issues were relating to the 700 Mhz band those have been resolved,” telecom minister Kapil Sibal told reporters here.
This particular band (700 Mhz) is considered to be very efficient and could fetch the government revenues more than it got through auctioning of 3G spectrum last year.
According to officials in Department of Telecom (DoT), spectrum in 700 Mhz band require probably half the investment to roll out services compared to what was required for rolling out services in wireless broadband spectrum auctioned in 2010.
The information and broadcasting (I&B) ministry has earlier placed its claim in this spectrum band saying that Doordarshan has 40 Mhz frequency assignment for mobile video link and 8 Mhz for digital transmission in four metros.
“The I&B has kindly agreed to vacate that band and that issue has been resolved,” Mr Sibal said.
In other major issue on vacation of 1700 Mhz to 2000 Mhz spectrum band between defence and telecom ministry, Mr Sibal said that most of the matters related to it had been resolved and expressed hope that it will be completely resolved in next meeting of EGoM scheduled for the coming week.
“Then there were some issues relating to 1700 Mhz to 2000 Mhz band. We have had a full discussion and hopefully it will be resolved next week,” Mr Sibal said.
In this case, the defence ministry had shown interest to give DoT only 150 Mhz and retain the rest 150 Mhz while DoT has been pushing the ministry to give it 230 MhZ and retain 70 MhZ in the civilian areas to operate sophisticated equipments but allot all 300 Mhz in the urban areas.
This spectrum can be used for 3G services, 4G services and it is a progressive band for CDMA technology as well.
As per the MoU signed between the two ministries, the defence ministry had agreed to vacate 25 MHz of 3G spectrum and 20 MHz of 2G in phases. In return, the DoT had committed to set up an exclusive defence band and defence interest zone for the armed forces.
The project, however, is stuck because of financial constraints. According to sources, the Planning Commission has approved Rs800 crore for the project as against demand of Rs6,767.94 crore by DoT which included Rs5,000 crore earmarked for OFC based network for defence services.
The EGoM, headed by finance minister Pranab Mukherjee, was also attended by home minister P Chidambaram, defence minister AK Antony, telecom minister Kapil Sibal, Planning Commission deputy chairman Montek Singh Ahluwalia, information & broadcasting minister Ambika Soni.
The clause in the new Mines Bill provides that “where a holder of mining lease is a company, at least one share will be issued for consideration other than cash to each affected family by mining related operations and such shares shall be non-transferable”
New Delhi: The ministry of corporate affairs (MCA) has suggested “fine-tuning” of the new mines law that provides for coal miners to share 26% of net profits and an amount equivalent to royalty by others, reports PTI.
Questioning a clause in the new bill that provides for issuing at least one share of the mining company to each affected family that will be non-transferable, the MCA in a letter to a parliamentary panel has said that under the Act shares of public limited, private limited and listed companies are transferable.
“Under the Companies Act, 1956, a window for transfer/sale of shares ought to be provided to the shareholders, with adequate safeguards for protecting the rights of affected families, it said to the Parliamentary Standing Committee on Coal and Steel, which is examining the Mines and Mineral Development and Regulation (MMDR) Bill.
“Thus, the clause 43 (3) need to be fine-tuned in accordance with the provisions of the Companies Act, 1956,” it added.
The clause in the new Mines Bill provides that “where a holder of mining lease is a company, at least one share will be issued for consideration other than cash to each affected family by mining related operations and such shares shall be non-transferable.”
The MMDR Bill, which was introduced in the Lok Sabha on 12th December, was referred to the Committee for in-depth scrutiny and the government is hopeful that once the committee gives its report by March-end, the new bill will be passed in the upcoming Budget session.
The bill proposes to set up a district development fund, where the money accumulated from the 26% profit sharing by coal miners and an amount equivalent to 100% of royalty for others, will be deposited and spent on local population and area development.
Also, the MCA has advocated for allowing limited liability partnership (LLP) for grant of mineral concession.
It may be seen from Clause 5 that a citizen of India, a company under the Companies Act, 1956 or a registered firm under the Partnership Act are eligible for grant of mineral concessions, the letter said.
It, however, added that “LLP, a new form of business entity has not been allowed to participate ... LLP too need to be included.”
The Cabinet had approved the long-pending controversial draft bill on 30th September last year. It will replace the 54-year-old legislation governing the sector, as it was felt that the existing laws have not provided a fair deal to those affected by the mining projects and the leases were not given in transparent manners.
The Cabinet gave its nod after a Group of Ministers (GoM) headed by finance minister Pranab Mukherjee, set up to address inter-ministerial differences, could reach a consensus after marathon sessions.
Major players and industry bodies had opposed the profit sharing clause in the bill.
The new law will govern the sector that includes globally significant resources of over 60 metallic and non-metallic minerals.
India ranks among the top five nations as far as coal and iron ore reserves are concerned.