Showing posts with label GoM. Show all posts
Showing posts with label GoM. Show all posts

Saturday, April 20, 2013

National

Lower GDP Stats
Despite desperate attempts of the government to move the numbers in the economy’s favour, GDP growth projections for the current fiscal year remains at 6.9% against last year’s figure of 8.4%. The slowdown in investments and low industrial output are the reasons for this decline. However, finance minister Pranab Mukherjee is still confident that the numbers will look up when full data for the year 2011-12 becomes available. The government has already run up fiscal deficit of 92.3% of its budget estimates in the first nine months of the current year, mainly due to less than anticipated tax collections. The central government has managed to raise Rs 5.2 trillion in revenue during the period, which is 61% of the budgeted target for the entire fiscal. The figures indicate that the government will find it difficult to meet its budgeted fiscal deficit target of 4.6% for the current fiscal. A lower than expected 1.8% growth in the index of industrial production (IIP) for the month of December 2011 has not helped matters either. Meanwhile, much to the relief of the government, the wholesale price inflation is on a 26 month low and is expected to stay at these levels at least for the next few months.

Airlines cheer
Much to the relief of airlines the group of ministers (GoM) has okayed the proposal for direct import of aviation turbine fuel (ATF), which contributes around 40% of the overall operating cost of an airline. However, the decision is yet to get the Cabinet go-ahead, which will open the way for implementation of the scheme. Airline operators have been lobbying for quite sometime for either imposing a flat 4% sales tax or to allow them to import ATF directly. The GoM’s approval of the scheme sent share prices of airlines like Jet Airways, Kingfisher and SpiceJet on an upward spiral as investors cheered the move. Allowing direct import of ATF will help airlines to save on sales tax, which varies from state to state. The absence of a uniform sales tariff has forced airlines to bear the cost of around 30% rise in their fuel expense on a y-o-y basis. Surprisingly, ATF in India is at least 60% higher than prices in West Asia or even Southeast Asia. ATF makes for 40-50% of the total cost for airlines companies. No wonder that operators like Jet and SpiceJet have been complaining that it’s the high fuel cost that has been responsible for their December quarter losses.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
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Tuesday, October 16, 2012

The UPA gave a great lesson

The UPA gave a great lesson in coalition politics – form GoMs whenever allies question you. But these groups achieved little, says Pramod KUMAR

Therefore, to be able to postpone answers to their questions, GoMs were formed. “Whenever we criticised the government’s bad policies, they would compromise and would either send the issue for revision to the concerned ministry or quickly form a GoM,” CPI (M) Politburo member Sitaram Yechury tells B&E. Even the veteran BJP politician Ravi Shankar Prasad holds the same view. According to him, PM Manmohan Singh is himself not happy with the government’s tenure and has marked his own performance a 7 out of 10.

“We feel that whenever government’s policy decisions were put under scanner by the communist parties, the government just formed GoMs to somewhat delay those decisions. And once the Left was out of the government, these pending decisions were imposed on them forcefully,” avers Prasad. Maybe this is the reason why PM himself blames GoMs for being the biggest hurdle in the functioning of UPA. In fact, looking at the number of GoMs formed, it would not be an exaggeration to call the UPA a GoM government.

However, Congress leader and former Commerce Minister Jairam Ramesh feels that GoMs were formed to re-think and to bring about the necessary amendments on some very important policy issues. “To fulfill the responsibility of a coalition government, we were always open to and respected the Left’s suggestions. We tried to do it with the help of GoMs. The opposition is trying to make an issue out of it because they are left with nothing else,” counters Ramesh. Nevertheless, one does feel that a few successful GoMs wouldn’t have harmed!


Source : IIPM Editorial, 2012.

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IIPM : The B-School with a Human Face

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Saturday, July 28, 2012

Metals, Mines and Troubled Minds

After Nearly two years of Discussions and Delays, The revised MMDR Bill is likely to be placed in The Parliament. Will the protesting locals and industry elements finally find peace? Doubts remain.

After several rounds of deliberations, discussions and interactions, a Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee on July 7, 2011, cleared the draft Mines & Minerals (Development & Regulation) Bill. As per government sources privy to the development, the Mines ministry plans to introduce the bill in the Winter session of Parliament. If passed, the new Mines & Mineral Development & Regulation (MMDR) Act will replace the existing MMDR Act, 1957.

As per the Bill recently cleared by the GoM, the Centre and states can levy cess on all minerals – 2.5% of the royalty in case of the Centre and 10% in case of the states. In addition, mining companies will now have to pay four times the money they presently pay to the states as contribution towards sustainable mine closure plans. The 10-member ministerial panel has said that coal miners should pay 26% of their profits, while other mineral mining firms should give an equivalent of 100% of the royalty they pay the government to compensate people displaced by these projects. However, the mining firms want a royalty-based sharing formula wherein they will have to pay only 26% of the royalty equivalent to the displaced. Sources say the proposal will be discussed further.

Miners in India, who have recently come out of a commodity slump have always been wary that the provisions of the new MMDR Bill, if legislated into an act, will spell doom for the Indian mineral resource industry. If it was any indication, shares of mining firms fell sharply after the panel approved the draft mining Bill, indicating a negative sentiment that the proposed provision for profit-sharing would have a negative impact on the companies’ profits. While Coal India fell 8.2%, Jindal Steel and Power declined by 2.5%, Hindustan Zinc and Sesa Goa by 4.2% each, NMDC by 2.5%, SAIL by 3.7% and Tata Steel by 2%, soon after the GoM paved way for the Bill to be put before the Cabinet.

In an important development, the GoM which vetted the draft Bill, has also given its nod for authorising and incentivising state governments to take up “prospecting and exploration, so that adequately prospected ore bodies can be put on bid.” The new Mining bill will empower state governments to hand out leases, take up prospecting and exploration activities before mines and call for bids for commercial utilisation of mineral deposits such as coal and iron ore. If the proposals become law, companies would need to make an annual cash contribution of Rs.100,000 per hectare to the state government over the life of a mine. This amount would go as contribution for implementing the mine closure plan, key for environmental rehabilitation and in providing succour to workers and communities dependent on mining activity for sustenance. Additionally, the Bill also proposes to give the states a free hand to levy cess on both major and minor minerals by a sum not exceeding 10% of the amount of royalty paid by companies for a particular mineral. Several states including West Bengal were already levying cess and local taxes on minerals at differential rates. The Centre had initially challenged the West Bengal’s move to levy state-specific taxes on coal produced in the state, but a few years ago, a Supreme Court ruling had gone in favour of the state. The Centre therefore, does not share coal royalty proceeds with Bengal. It is pertinent to note here that although the royalty on minerals are levied and collected under the central law, the process of appropriation is actually carried out by the states. As per the GoM, the proposed central cess on minerals would be used for better administration of mining activities.


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