Government to set up Board for fast clearance to energy, infra projects

The PMO decided to set up the Project Clearance Board against the backdrop of several projects, including 70 in oil and natural gas sector, facing delays due to lack of necessary clearances


New Delhi: In a major move to boost investor confidence, the Indian government has decided to set up a high-powered board to ensure speedy 'one-time' clearances to projects in energy and infrastructure sectors and address the problems in getting regulatory permissions, reports PTI.
 
The decision to set up the Project Clearance Board on the lines of Foreign Investment Promotion Board (FIPB) was taken by the Prime Minister's Office (PMO) against the backdrop of several projects, including 70 in oil and natural gas sector, facing delays because of lack of necessary clearances.
 
The Board, to be headed by the Cabinet Secretary, will include representatives from the Ministries of Home, Defence, Environment & Forests, Commerce, Coal, Department of Space and other infrastructure and energy related Ministries or Departments, a PMO statement said.
 
"In a meeting held in PMO to review the status of clearances of Oil & Gas Blocks awarded under the NELP, it was decided that a Project Clearance Board along the lines of FIPB, would be constituted under the chairmanship of the Cabinet Secretary for review and issue of one-time clearances, including security clearance," it said.
 
The Board will meet on a monthly basis to review the status of clearances for energy and infrastructure projects and expedite issuing of security and other clearances.
 
It noted that "one of the biggest hurdles" to speedy implementation of projects is the delays faced by project implementing agencies and private firms with concessions, in obtaining security related clearances from many agencies.
 
It cited the example of progress in exploration work in over 70 oil blocks awarded under the NELP which has slowed down due to lack of clearances. There are similar problems in other areas such as Ports and infrastructure sectors, it said.
 
The PMO said the decision to set up the Board was taken as there is "a need to have an institutionalised mechanism for issuing clearances in a time-bound manner".
 
"There is already a model for clearing foreign investments in the form of the FIPB where foreign investment clearances are given through regular meetings of the FIPB under the Department of Economic Affairs," the PMO statement said.
 
"A need for a similar mechanism was felt for other clearances so that the issue of delayed clearances is resolved," it said.
 
Ministries would report to this Board the status of issuing of clearances after following their internal due diligence processes.
 
For the Petroleum & Natural Gas sector, the special cell for clearances being set up in DGH will act as the secretariat, the statement said.
 
A common mechanism for all sectors will be evolved soon and the Board will be set up in the coming weeks.
 
The decision to set up the board comes at a time when the government is facing allegations of policy paralysis and there are apprehensions among foreign investors.
 
US President Barack Obama had told PTI last week that investment climate in India had deteriorated.
 
The PMO announcement comes on a day Tata group Chairman Ratan Tata said that Prime Minister Manmohan Singh must restore government credibility and place the country on a growth path once again by "removing roadblocks".

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Insurance companies under lens for tax evasion of over Rs300 crore

An initial probe has found that insurance companies are evading taxes at the time of renewing old policies or refunding amounts on policies surrendered before the maturity period


New Delhi: Insurance companies have come under the scanner of a government intelligence agency for allegedly evading service tax of over Rs300 crore, reports PTI.
 
The Directorate General of Central Excise Intelligence (DGCEI) has initiated a probe following complaints of the service tax evasion by various insurance providers.
 
“There have been some instances of tax evasion by insurance companies. An enquiry is being conducted by the officials,” a senior DGCEI official, who did not wish to be identified, told PTI.
 
He said the records of insurers are being cross-verified to ascertain any irregularities.
 
“The inquiry so far has found service tax evasion of at least Rs300 crore. The investigations are underway and the amount is likely to be higher,” the official said without divulging names of insurance companies under the lens.
 
All general policies including insurance against risk of loss to assets like motor vehicle are charged service tax at 12.36% on the annual premium paid, while the rate of service tax for life insurance varies on the part of premium taken towards risk coverage, according to a Mumbai-based service tax expert.
 
According to another DGCEI official, most of the irregularities have been detected in payment to insurance brokers or agents by the companies.
 
“During our enquiry, we found that some companies were deducting service tax from agents who were selling their products. But failed to show it on their accounts book for government scrutiny,” the official said.
 
Besides, there have been instances where the companies were giving incorrect data of the total policies sold or renewed by them to evade tax, he said.
 
The total annual premium income of the insurance industry comprising life, non-life and health, is around Rs3.5 lakh crore, as per the Insurance Regulatory and Development Authority (IRDA) data. 
 
According to DGCEI, initial probe has found that companies were evading taxes at the time of renewing the old policies or refunding amounts on policies surrendered before the maturity period.
 
“There are also instances where the firms are evading service tax net in cases where the insurer is charged an amount for shifting from one insurance company to another,” the official said.
 
According to analysts, there are two types of frauds in the insurance sector. One is committed against the insurance companies by the brokers and the external constituents.
 
The second is the fraud committed by the insurance companies on the shareholders, regulators and tax authorities.
 
Tax evasion falls under the second category. Under this, commission is clubbed as other expenses to circumvent service tax payments.

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Monsoon: Will it play havoc again?

With 70% of India not having received adequate rainfall so far, the government faces tough challenges on food prices, inflation, water situation and agriculture. Are we prepared to face the eventualities? 


The Indian Meteorological Department’s (IMD) predictions are as uncertain and unreliable as the weather and our monsoon is already affecting the aam aadmi. Around 70% of India has not received adequate rainfall so far. The situation, though nobody wants to publicly admit, is grim.
 
According to the Central Water Commission’s reports published recently, against the live storage capacity of 154.421 billion cubic metres (cbm) average storage of water, till 5th July was only 25.191 billion cbm in 84 major reservoirs monitored by the CWC.
 
Unfortunately, this is the lowest in the last 10 years. With continued poor rains in catchment areas, this is a grim situation.
 
Ashok Gulati, chairman of Agricultural Costs and Prices (CACP), in a recent interview has stated, “We have adequate foodgrain stocks” to tide over monsoon failure.  He contends that food inflation is higher due to vegetable prices, particularly that of onion and potatoes!
 
He further explains that some four to six months ago, potatoes were thrown on the road at Rs2 a kg; today, at the farmer’s level, it is Rs8-Rs10 a kg and the consumer pays Rs15-Rs20.
 
In reality, this if far from the truth, as the aam aadmi pays much more than these when he/she buys from the market. In fact, the price of essential commodities varies at various levels or locations from where one sources these. The price in the wholesale market is different from retail; from Hopcoms and the vegetable cart vendor to the kirana shop next door!
 
Besides, whoever depends upon eating just potatoes? Rest of the vegetables as also foodgrain are just as important. The government may employ MSP (minimum support price) to ensure that the wiling farmer gives his produce, but nothing has really been done to control the menace of the chain of middlemen who usurp the profit at every stage before the produce reaches the ultimate consumer!
 
All said and done, what are the immediate plans of the government?  
 
Apparently, it has ordered its seed division to make alternate seeds available; crop division to roll out an alternative crop plan if the poor rainfall continues; to report on the drinking and irrigational water requirements; to review fertilizer demand pattern; set up contingency plans for meeting the fodder shortage that will occur in affected areas and to review location-wise storage of potatoes and onions and, presumably, take measures to check rising vegetable prices.  
 
To support this, even the consumer price index has gradually moved from 7.65 to 10.36 in May while the wholesale price index has reached 7.55 in May as against 6.89 in January as per Central Statistical Organisation data.
 
Of course, some parts of the country have had more than adequate rain and floods likely if situation continues. The sowing season is delayed because of the rains, and it is essential that the government now comes forward to provide urgent and immediate aid to farmers in the form of free supply of seeds, fertilizers and expedite plans for releasing of stocks of foodgrain in affected areas to avoid starvation and suicides by farmers.
 
In the meantime, we do have continuance of river water disputes, while millions of cusecs of water are being discharged into the sea wastefully without being tapped for use in the parched lands of the country. Isn’t that a shame? 
 
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected])

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