New Delhi: The Centre today rejected demand for ban on iron ore export, but said states need to take stringent steps to prevent illegal mining, reports PTI.
"Merely because state governments are not able to prevent and stop illegal mining, we should not ban export of iron ore," mines minister B K Handique said while replying to a debate on illegal mining in the Rajya Sabha.
The problem of illegal mining, which is growing in alarming proportion in Karnataka, Andhra Pradesh, Orissa and Jharkhand, is a problem of governance, he said.
"Rather banning export of iron ore, we need to see there is no illegal production of iron ore," the minister said, adding that the need of the hour is to tighten the regulatory system with adequate staff.
The minister also clarified that Karnataka, which is the second largest producer of iron ore in the country, has not banned export of iron ore.
"Karnataka has prohibited transportation of iron ore to ports and not export as such," he said.
Iron ore is a vital steel making raw material. India, the world's third largest iron ore exporter, produced 218 million tonnes of iron ore in 2009-10 fiscal and exported 128 million tonnes.
Participating in the debate, leader of the opposition Arun Jaitley said illegal mining is done by those who have legitimate permission for lawful mining. "On account of illegal mining there is large scale tax evasion," he said.
He suggested that mines should be allotted to those who are actual users. It is necessary to link the allotment of mines and minerals to the manufacturers rather than mere traders, he added.
Mr Jaitley further said the government must allow volumes to be mined that are required in the country and leave adequate resource for the future generations.
Pointing royalty and revenue to the state and central governments are dismal, he said, "There is a need to review and increase the volume of these taxes."
On demands from members to increase royalty on iron ore, Mr Handique said the rate of royalty is revised every three years and promised to have a relook at the matter.
Royalty rate on iron ore was revised to Rs125 per tonne in 2009 from Rs21 a tonne as a result state saw massive increase in royalty collection from Rs250 crore in 2008-09 to Rs4050 crore in 2009-10.
On nationalisation of mines to check illegal mining, the minister said there are practical difficulties to nationalise the country's mineral resources.
"Nationalisation itself cannot put an end to illegal mining. There are practical difficulties," he said.
On demands for CBI enquiry into illegal mining Orissa, he said the power for such probe rests with the state governments and "the Union government cannot unilaterally do it."
However, if the Orissa High Court gives instructions, the Centre is ready for it, he said, adding that the Centre has also set up a Commission of Enquiry to deal with cases related to illegal mining besides the Indian Bureau of Mines (IBM) is developing a technique of mapping of the mineral area.
Mr Handique expressed the hope that the Mines and Minerals Development and Regulation Act 2010 will tackle the problem of illegal mining and ensure holistic approach in grant of mineral licenses.
New Delhi: The country's most valued firm Reliance Industries (RIL) has raised a loan worth $1 billion (about Rs4,700 crore) from various banks, reports PTI.
According to market sources, Mukesh Ambani-led Reliance Industries has raised term loans worth $1 billion from as many as 31 banks.
However, it could not be ascertained for what purposes the loan would be utilised by the company.
When contacted, a Reliance Industries spokesperson declined to comment.
The banks that were involved in arranging the loan include Barclays Plc, Citigroup Inc, DBS Group Holdings and Standard Chartered Plc.
Central government employees are getting an unfair deal with the NPS as politicians play politics and finance ministry plays safe
Central government employees have missed out on one of the biggest bull runs, which would have given them the desired head start that they needed, and for no fault of theirs. This is all thanks to the indecisiveness of politicians and the ministry of finance playing it safe regarding the New Pension Scheme (NPS) for Central government employees.
Out of the seven asset management companies (AMCs) that manage NPS, only three of them, all of which are state-controlled companies, are allowed to manage the funds for government employees. According to the data available, State Bank of India (SBI), Unit Trust of India (UTI) and Life Insurance Corporation (LIC) offered a return of around 11% to 12% to Central and state government employees between 1st April and 31st March.
While this seems better than the 8% that government employees were getting under the earlier regime, it is a low return given that under NPS, a part of the money can be invested in equities. Between 1 April 2009 and 31 March 2010, the Sensex rose 77%. Now if the employees were allowed to invest 50% in equities, then the returns on their NPS investments would have been that much higher, as the equity portion of their assets would have yielded healthy returns. Instead, the employees got returns as low as 11% on their NPS investment.
The reason the returns are low is because only 15% of the money has been allocated to equities under a diktat. This is because politicians are squabbling over the NPS itself, with Mamata Banerjee hell bent on stalling the full application of the scheme until the West Bengal elections next year. And the ministry of finance lacks the courage to make it a market-determined scheme and has played safe by allowing only 15% to be put in equities. According to officials close to the matter, this directive has come straight from the finance ministry itself. This directive is unfair to government employees because they have been cut loose from a guaranteed pension scheme and have to choose between different plans to create their post-retirement nest egg. However, in practice, they don't have the choice.
NPS is a new contributory pension scheme introduced by the Central government for its own new employees, joining after 1 January 2004. Under the system, each new central government employee will open a personal retirement account on joining service. Every month, and till the employee retires or leaves government service, 10% of the employee's salary will be transferred into this account with matching contribution from the government. When the person retires, he will be able to use these savings to take care of the needs and expenses of his family during old age.
In theory, the NPS offers a choice to investors to put more money under different schemes but in practice, only 15% is going into equities even though the key point of NPS is that it is a defined contribution scheme and the benefits would depend upon the amounts contributed and the investment growth up to the point of exit from NPS. Returns are not guaranteed.
A fund manager handling NPS told us that he is allowed to invest only up to 15% of the amount in equities, while the rest is invested in a mix of government securities and money market instruments. Until a year back (before 1 April 2009), only 5% was allowed to be invested in equities, while the rest went into Central government securities and money market instruments. The change in stance was done not so much as to ensure better returns on investment, but to stay in line with other pension fund products.
The official reason given to fund managers is that the government wants to play it safe. According to a fund manager, there is some logistical issue, because of which the entire government employee database has not flown to the Central Recordkeeping Agency (CRA) till now. Somebody else had to take a call on the asset allocation and to be on the safer side, the government decided not to allocate more than 15%.
The Pension Fund Regulatory and Development Authority (PFRDA) Bill is still to become an Act and as such PFRDA has no legal powers and functions. In fact, the PFRDA Bill 2009 had become the bone of contention among political bigwigs from West Bengal and Tamil Nadu. It was introduced in 2005 by the then finance minister P Chidambaram. The Bill proposed to set up a regulator and give more freedom to subscribers to invest in pension funds. Sadly, it attracted opposition by the Left Front which is against the equity investment option given to investors in the NPS.
Even today, the government faces stiff opposition to the Bill from its own coalition. The Congress-led United Progressive Alliance (UPA), which had to garner the support of different political parties like M Karunanidhi's Dravida Munnettra Kazhagam (DMK) and Mamata Banerjee's Trinamool Congress, had put the legislation into deep cold storage as they were opposed to the Bill. Meanwhile, government employees have missed out on a year of stupendous return and will be forced to earn subpar returns for a few years. The next major market move may be years away and it is not even certain that by that time, government employees will still be suffering from the worst of both - market-determined return but no choice to choose market instruments of high returns.