New Delhi: The Plan Panel has asked the finance ministry to examine the possibility of setting up several infrastructure debt funds (IDFs) to fund core sector development activities in the country, which are estimated to cost $1 trillion during the 12th Five Year Plan (2012-17), reports PTI.
Following up on the suggestions made during the recent visit of US president Barack Obama to India, Planning Commission deputy chairman Montek Singh Ahluwalia has written a letter to finance minister Pranab Mukherjee suggesting modification of the regulatory framework and also on the need to exempt IDFs from payment of withholding tax.
“It would be very good idea if we can have not just one debt fund... (but) several debt funds. In order to make it possible, you need several regulatory relaxations or modifications. I have sent a note to the finance minister giving my assessment. I believe that it is being examined in the finance ministry,” Mr Ahluwalia told reporters.
During Mr Obama’s visit last month, the governments of India and US gave in-principle approval to a proposal from the industry to set up a $10 billion infrastructure fund.
Mr Ahluwalia said India needed several debt funds to finance infrastructure sector activities in the 12th Five Year Plan, as 50% of the total $1 trillion investment required during the 2007-12 period would have to come from the private sector.
The Planning Commission deputy chairman also made out a case for exempting debt funds from payment of withholding tax, as the levy would make their operation unviable. Withholding tax is the amount that is required to be deducted by an entity while paying interest on borrowings.
After JSW’s takeover of Ispat, Sajjan Jindal is the largest steel producer, beating even SAIL, a remarkable achievement. On the other hand, Lakshmi N Mittal’s struggle to get a proper foothold in India has become even more difficult
The takeover of Ispat Industries by the Sajjan Jindal-controlled JSW group has fundamentally altered the equations in the steel industry in India. For one, Sajjan Jindal has achieved the unthinkable. He has emerged as the largest steel producer in India (after his Vijaynagar expansion is complete in 2011), beating Steel Authority, something that even Tatas have not been able to achieve. At the same time, the dream of Lakshmi Mittal, estranged brother of Vinod and Pramod Mittal (the promoters of Ispat Industries) to control a large steel business in his motherland has become a bit more difficult.
For the last few years, ArcelorMittal has been trying to gain an entry into India primarily by setting up a greenfield venture. It tried to set up a project in Jharkhand but this made no headway and eventually it shifted the project to Karnataka, where things are not going smoothly either. The acquisition of land itself was supposed to be completed this year, but this is not likely to happen soon.
What happens to Lakshmi Mittal's Indian foothold, Uttam Galva? This too would be a problem now. In September last year, ArcelorMittal managed to get a foothold in India by buying a stake in Uttam Galva, which makes galvanized steel. However, it was too small a move for a giant like ArcelorMittal and there was much speculation whether Uttam Galva was the stepping stone for Lakshmi Mittal, even as he continues to pursue the greenfield ventures. Now, with Ispat Industries having changed hands, Lakshmi Mittal's stepping stone has now turned shaky.
That's because Uttam Galva sources its material from Ispat Industries' hot-rolled coil plant. However, sourcing the raw material from Ispat is going to be a problem, now that JSW has entered Ispat. Not only will JSW stop selling raw material to Uttam Galva for competitive reasons, but it may also go for forward integration to use up the raw materials for value-added products.
All this leaves ArcelorMittal exactly where it was a few years ago-with virtually no significant operations in India. In fact, ArcelorMittal was the frontrunner in the race to acquire Ispat Industries even a week or two ago. However, so intense is the dislike Vinod and Pramod Mittal have for Lakshmi Mittal, they ensured that he would not gain control over Ispat under any circumstances. It is this rivalry that Sajjan Jindal managed to exploit and enter Ispat.
What about LN Mittal's greenfield plan? The fact is that over the last 20 years not a single greenfield, large-scale steel project has come up in India except for Bhushan Steel in Orissa. It is extraordinarily hard to set up a steel project in India primarily because of the large number of licenses and linkages that are needed to secure land, iron ore and coal. It is precisely the problems of securing resources that led a frustrated Lakshmi Mittal to move from Jharkhand to Karnataka, where too his company has made little headway.
It remains to be seen how other players in the steel industry react, but with no greenfield projects likely to come up and no other major plants up for sale, it is going to be an uphill battle for Lakshmi Mittal, one of the world's richest industrialists, to gain a proper foothold in his country of origin. In all this, Sajjan Jindal has stolen a march over many other steel magnates. He now controls the largest steel capacity, larger than even the Steel Authority of India (SAIL).
New Delhi: The wholesale price index (WPI) based inflation may snap three-month decline and rise in December from 7.48% in November before coming down in January, reports PTI quoting official sources.
While not commenting on the likely figures in December, a top advisor in the finance ministry said inflation is likely to ease in January, not only from the figures of December but also November.
“The next reduction could happen with the January figure when I would expect another decline in inflation (from November),” chief economic advisor Kaushik Basu said on the sidelines of TIE Entrepreneurial Summit.
He, however, declined to comment on onion prices which touched Rs70 a kg in retail markets.
WPI inflation declined to 7.48% in November from 8.58% in October, mainly boosted by lowering of pressure on certain food items.
This was the fourth consecutive month when the overall wholesale price inflation has been in the single digits. It had remained over 10% for six months till July.
The retail price inflation for items consumed by agricultural and rural labourers also declined to 7.14% and 6.95%, respectively in November.
However, wholesale price food inflation rose to 9.46% for the week ended 4th December on account of higher prices of rice, vegetables, milk and fruits. It stood at 8.60% in the previous week.