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Repression Infrastructure To Be Streamlined In Indigenous Humanscape To Continue The Growth Story
Troubled Galaxy Destroyed Dreams, Chapter 848
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Repression infrastructure to be streamlined in indigenous humanscape to continue the growth story. Masses have to be shocked with electricity!Foreign investors see tremendous growth opportunities in India and can infuse here FDI worth about $ 250 billion a year, but they want a guarantee for a progressive and investment friendly policy framework, a top management guru has said. Overseas direct investment by Indian companies, including Essar Steel, Tata International and Videocon Oil Ventures, rose to USD 3.30 billion in January, a rise of 28.4 per cent from a month ago, RBI data showed today.The domestic companies had made an investment to the tune of USD 2.57 billion in December 2012.A total of 480 deals took place during the month to carry out outward foreign direct investments, it said.
The ambitious rural road scheme received a boost today with the government clearing projects worth an estimated Rs 38,500 crore to connect left out habitations including those in 82 Naxal-affected districts and areas of Arunachal Pradesh bordering China. The Union Cabinet, chaired by Prime Minister Manmohan Sigh, gave "in principle" approval for connecting all habitations with a population of 100 tribals and above in 82 Naxal-hit districts with all-weather roads under the Centre's flagship programme PMGSY.
On the other hand, the government today said it is satisfied with the response to NTPC's share sale and expects to garner more than Rs 11,500 crore from the offer -- the biggest disinvestment mop up so far this fiscal. It means further privatisation of electricity sector resultant in indiscriminate hike in tarriffs.
Meanwhile, observing that Naxalism can be tackled only through development, Union Rural Development Minister Jairam Ramesh today said the Centre has decided to improve the condition of roads in the naxal-hit regions under the Pradhan Mantri Gram Sadak Yojana (PMGSY).
"The road connectivity is a major problem in the left wing extremism areas. In these regions, Naxals prevent construction of roads and also blow up already constructed roads," Ramesh said during his two-day visit to Bastar region that concluded today.
Therefore, the Union Government has decided to improve road connectivity in the naxal-hit regions under the PMGSY in two phases, Ramesh added.
In the first phase, WBM (Water Bound Macadam) roads will be constructed in these regions, he said adding that the asphalting work will be taken up later if naxals do not indulge in road destruction activities, he said.
During his visit to the tribal-dominated Sukma and Bijapur districts in the region, Ramesh asked the public representatives to carry the construction work with help of gram panchayats.
However, the public representatives said that the gram panchayats will come on the target of the Maoists if they get involved in development projects.
The minister also said that very soon an engineering branch of Central Reserve Police Force (CRPF) will be set up in the naxal-affected regions for road construction.
During his visit, the state officials informed the minister that under PMGSY, nearly 73 roads are to be constructed in Sukma district, of which construction of 20 roads have been completed while five of them are under construction.
Besides, construction of 48 roads in sensitive areas have been halted, they informed.
In Bijapur, nearly 33 roads are to be constructed under the scheme out of which construction of nearly 13 are underway, the official said.
In case of multi-connectivity at the block level, identified by the Union Home Ministry, it is not compulsory that tar-paved roads should be constructed in such areas where Maoists target metalled roads used by security forces.
"What we are saying now is you can have four roads, but one of them will be a blacktop road," Rural Development Minister Jairam Ramesh told reporters here.
He said the government has given "in principle" approval for covering unconnected habitations with population of 100 persons and above (as per the 2001 census) in the Left Wing Extremism-affected blocks (identified in consultations with the Home Ministry).
The approval has been given with a limited provision to complete missing links, "to form closed loops from through routes of the core network at an estimated cost of Rs 8,000 crore (at 2012-13 prices)," he said.
At present, the Pradhan Mantri Gram Sadak Yojana (PMGSY), envisages connecting all habitations with a population of 250 persons and above in tribal areas in Naxal-affected districts.
The Cabinet also gave nod to connect unconnected small villages with population below 250 in strategically important districts of Arunachal Pradesh bordering China with all- weather roads.
An amount of Rs 1200 crore is expected to be cost for providing new connectivity to the habitations in the border districts of Arunachal Pradesh, Ramesh said.
Out of the state's 17 districts, 10 districts are bordering China and Myanmar and the small habitations in these districts will be major beneficiaries.
Brace up for a phased increase in your electricity bills, as the government seems to be unrelenting on its decision to do away with subsidies, and is leaving no stone unturned to completely phase out the sops it offers on all energy products, be it petroleum, power or coal.
As of now, the total subsidy bill of the government is pegged at 2.4 per cent of the gross domestic product (GDP), which the government plans to bring down to 1.4 per cent in the 12th Plan.
Reiterating the government's commitment on the same, Power Minister Jyotiraditya Scindia today said: "Days of subsides are gone for the power sector."
The statement assumes significance as the common man may soon see another round of tariff hike for electricity.
Mr. Scindia was speaking at the 5th India Energy Congress.
Coming down strongly on the "unnecessary subsidy provided to the affluent", he said that extending subsidy and then providing relief to state electricity utilities by means of restructuring their debts is a failed model. "We did such restructuring 10 years ago also, but then we had to continue with providing subsidy, and too without a hike in tariff ... this proved bad for power distribution firms (discoms), which saw their debt bloat further."
Confirming that the moves will make the consumer shell out more in power bills, Mr. Scindia said: "The tariff hike has to be done on a regular basis, and can't be a once-in-a-blue-moon affair."
The power minister was referring to the subsidies given by respective state governments towards the households.
Mr. Scindia said the subsides given by the state governments put pressure on discoms, and "slowly they become sick units, thanks to the rising debt".
The minister also said: "The subsidy should reflect in the balance sheets of the state governments and not of the discoms."
The whole issue of tariff hike is necessitated as the input cost of coal and gas for power producers has gone up significantly, the minister said.
Also, it's a double whammy as the domestic coal and gas production has not gone up in tandem with the addition of power production capacity, even as the international price of coal and gas has doubled or even trebled in the last few years.
In India, price hike of any energy product, be it petrol, diesel, cooking gas or electricity, is a politically sensitive issue.
Any government, state or central, hesitates in taking a decision on the issue. However, with fiscal deficit poised precariously, it looks like the government is left with no other option but to hike the price of energy products.
In last few months, the central government has announced a series of price hike decisions on petroleum products.
In the power sector, the Cabinet approved a restructuring of debt of state power distribution firms, but on the condition that the states will allow tariff hike in tandem with the input cost incurred by power producers.
Once the state distribution firms are allowed to revise tariff, power producers like NTPC, NHPC, DVC, Tata Power, Reliance Power, Adani Power, among others, will benefit thanks to payments from discoms on a timely basis.
Govt to garner over Rs 11,500 cr from NTPC share sale
The government today said it is satisfied with the response to NTPC's share sale and expects to garner more than Rs 11,500 crore from the offer -- the biggest disinvestment mop up so far this fiscal.
"The government is satisfied with the response to this (NTPC) offer. We expect more than Rs 11,500 crore from the issue," Disinvestment Secretary Ravi Mathur said here after the offer closed for subscription.
The total demand received is for 132.84 crore shares and indicative price is Rs 145.91. Thus, the offer has been subscribed 1.7 times, he said.
Sharing further details, Mathur said there was good participation from foreign institutional investors (FIIs).
"One FII bid for 1,000 crore shares in the early hours of the trade. More order inflow came in towards the end of the day. Individually, FIIs have put in USD 50-100 million," he said.
The government had fixed the floor price for the 9.5 per cent stake auction of NTPCBSE -2.72 % at Rs 145 per scrip.
The government is selling 78.32 crore shares or 9.5 per cent of its stake in NTPC through the offer for sale route. It holds 84.50 per cent stake in NTPC. After stake sale, its holding will come down to 75 per cent.
So far this fiscal the government has already raised over Rs 10,000 crore through stake sale in PSUs like Oil IndiaBSE -0.56 %, NMDCBSE -0.66 % and HCL.
Govt likely to miss FY13 fiscal deficit target: Fitch arm
The government is likely to overshoot its fiscal deficit target of 5.3 percent for the current fiscal, feels Devendra Pant, Chief Economist, India Ratings & Research, part of the Fitch Group.
The government is likely to overshoot its fiscal deficit target of 5.3 percent for the current fiscal, feels Devendra Pant, Chief Economist, India Ratings & Research, part of the Fitch Group.
A government estimate pegged India's gross domestic product (GDP) to grow 5 percent in fiscal year 2012-13. This is the lowest of all growth projections issued by the government and the RBI.
"While the estimated investment rate in FY13 is likely to be similar to FY12, 80 basis point increase in share of consumption expenditure (private and government) would reduce savings rate further leading to further widening of current account deficit in FY13," said a note by Pant.
"The growth slowdown is reflective on the tax collection, which are growing at lower rate than the budgeted growth rates. The government has changed its fiscal deficit target to 5.3 percent in FY13 from budget estimate of 5.1 percent. Even after factoring in recent disinvestment proceeds, India Ratings expects, it will be difficult for government to limit its FY13 deficit to 5.3 percent," Pant said.
India's per capita income rises to Rs 5,729 per month
India's per capita income, a gauge for measuring living standard, is estimated to have gone up 11.7 per cent to Rs 5,729 per month in 2012-13 at current prices, compared with Rs 5,130 in the previous fiscal.
The estimated rate of growth in per capita income for the current fiscal, however, is lower than the previous fiscal when it grew by 13.7 per cent.
"The per capita income at current prices during 2012-13 is estimated to be Rs 68,747 as compared to Rs 61,564 during 2011-12, showing a rise of 11.7 per cent," an official release by the Central Statistics Office ( CSO) on Advance Estimate of National Income, 2012-13 showed today.
The per capita income in real terms (at 2004-05 constant prices) during 2012-13 is likely to attain a level of Rs 39,143 as compared to the First Revised Estimate for the year 2011-12 of Rs 38,037, it said.
The Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs 29.94 lakh crore in 2012-13 as against Rs 27.49 lakh crore in 2011-12, the release said.
However, at 2004-05 constant prices, the GFCF is estimated at Rs 19.44 lakh crore in the current fiscal as against Rs 18.97 lakh crore in the previous fiscal, it added.
The data also estimated an increase of 13.8 per cent in the Government Final Consumption Expenditure ( GFCE) to Rs 11.87 lakh crore at current prices for 2012-13 against Rs 10.43 lakh crore in 2011-12.
On Private Final Consumption Expenditure ( PFCE) for the current fiscal, it has estimated an increase of 12.8 per cent to Rs 57.06 lakh crore at current prices as against Rs 50.56 lakh crore in the previous fiscal.
"These advance estimates are based on anticipated level of agricultural and industrial production, analysis of budget estimates of government expenditure and performance of key sectors like railways, transport other than railways, communication, banking and insurance, availbale so far," said the data.
These estimates have been compiled using the data on indicators available from the same sources as those used for compiling GDP estimates by economic activity, detailed data available on merchandise trade in respect of imports and exports, balance of payments, and monthly accounts of central government, it added further.
"If we want to take the FDI from the current $ 20-30 billion to about $ 250 billion a year, the investors making this investment would need to see the progress that has been made to guarantee him growth," MIT Sloan School of Management's Deputy Dean S P Kothari told PTI.
"The investors would ask for a policy framework that is progressive and investment friendly," Kothari said here ahead of Citi-MIT Sloan Symposium being jointly organised here by Citibank and MIT Sloan School of Management tomorrow.
The MIT Sloan School of Management, based in Cambridge, Massachusetts, is one of the world's leading business schools and some eminent MIT alumni members, along with business leaders and policymakers, would talk about 'Securing India's rightful place in the economic and financial world' at the symposium being held in the national capital.
Talking about India's growth potential, Pankaj Vaish, MD and Head of Markets at Citi South Asia, said that India can think of growing FDI to over ten times of the current level.
"There are opportunities in areas like manufacturing and food processing, where FDI can help in containing inflation. We need to imbibe the global best practices which we can learn from global corporations who would bring in this FDI.
"It is not merely about the foreign money, but the access the money gets in terms of better products and services. FDI worth $ 25 billion is good, but minuscule when compared to the size and opportunity of India. Our goal should be 8-10 times of the current level of FDI investment," Vaish said.
"I believe we should aim for 20 uninterrupted years of around 10 per cent GDP growth. It should be our single-minded goal as a nation," he added.
Kothari said that there is a tremendous fascination about India among the global investors.
"India offers many opportunities for rest of the world, the first and foremost being its huge talent pool that is one of the best in the world and very well trained," he said.
"Those who think of India as an investment destination, also think of thse benefits. When they taste india, they say it is phenomenal in terms of growth opportunities on many dimensions," Kothari said.
However, there are other dimensions where they feel that things could have been better and those are the areas where leaders and policymakers need to work, he added.
"India has made great strides in becoming more open and more investor friendly, but there still remains areas where progress has not been of desired levels," Kothari said.
"India needs to show that it has overcome the hurdles and there would not be roadblocks for the investments being committed, as what we are talking about is an investment of $ 200-250 per person," he added.
Nine lakh bank a/c opened in East Godavari for Aadhaar
East Godavari district Joint collector Babu A today said so far nine lakh bank accounts have been opened in the district to provide Aadhaar-based services.
Babu today held a review meeting on the Aadhaar-based services. He said another 11 lakh accounts would be opened for the people to avail of these services in the district.
Finer details of price-pooling before Cabinet in a week: Sriprakash Jaiswal, Coal Minister
Two days after the Cabinet gave the in-principle approval for price pooling, Coal Minister Sriprakash Jaiswal today said finer details of the mechanism will be put before the Cabinet within a week for final nod.
Jaiswal said states will not be impacted by the decision to pool prices of domestic and imported coal to arrive at a uniform price of the feedstock as it would not be implemented for power plants commissioned before March 31, 2009.
"The Cabinet has given its nod for price pooling and the Ministries of Power and Coal will have to work out a mechanism for it. We will place it before the CCEA within a week for a final decision on it," Jaiswal told reporters here on the sidelines of India Energy Congress.
Asked about states' opposition to price pooling, Jaiswal said they would have opposed it if the government had decided to bring old plants also under the ambit of price pooling.
"Price pooling would not be implemented for power plants, commissioned before March 31, 2009. So, there is no question of states being impacted by it," he said.
Many state governments have voiced their opposition to the price pooling mechanism as they fear that this could lead to increase in electricity tariffs.
The Cabinet Committee on Economic Affairs (CCEA) on February 5 gave its in-principle approval to price pooling mechanism. Information and Broadcasting Minister Manish Tewari, who revealed this to media, had not spelt out any time line for fixing the specifics of price pooling.
He had merely said that "both the ministries have appreciated the urgencies and they would be coming back as quickly as possible".
Prime Minister's Office had directed Coal India LtdBSE 0.47 % (CIL) and Central Electricity Authority last year to work on price-pooling, so as to ensure 80 per cent supplies to power plants.
CILBSE 0.47 % on its part had said that price pooling is a mechanism to implement fuel supply agreement (FSA) with power companies.
The CIL board had earlier approved the modified FSA without price-pooling, for assured supply of 65 per cent through domestic sources and 15 per cent from imports at cost plus basis.
If price pooling is approved, then 15 per cent supply of imported coal "will be not in the cost plus method, but in pooling mechanism", it had said.
7 FEB, 2013, 11.04AM IST, KALYAN PARBAT,ET BUREAU
Government considering divesting 10% stake in Telecom Consultants of India Ltd
KOLKATA: The disinvestment of public sector company, Telecom Consultants of India Ltd (TCIL), is on the cards. The Telecom Commission, the highest decision-making body of the communications ministry, will meet on February 18 to consider listing TCIL by divesting a 10% stake. State-owned TCIL was set up in 1978 as a wholly-owned government company and today operates in 58 countries.
The company's consolidated net worth as on September 30, 2012, stood at Rs 1331.11 crore while its standalone net worth was pegged at Rs 428.26 crore, according to internal documents reviewed by ET. Till date, the company has paid a cumulative dividend of Rs 177.63 crore. Last March, the disinvestment department had suggested that the government offload 10% in TCIL, and had asked the telecom PSU to expedite steps to go for an inital public offer (IPO) in consultation with the telecom department. State-owned TCIL, however, was given the option to take a call on fresh equity infusion.
Back in June 2009, the TCIL board had approved the IPO route to issue 4.32 million equity shares of Rs 10 each. A clutch of measures have been taken to hasten TCIL's listing, which includes raising its authorised capital from Rs 30 crore to Rs 60 crore and restructuring its board by increasing the number of directors to 12, including 6 independent directors, according to an internal department note reviewed by ET. The TCIL board has also approved share allotments to employees under an ESOP scheme as per applicable guidelines. TCIL had, however, suggested to the telecom department that an IPO may not be necessary if it was allowed to offload its 30% holding in Bharti Hexacom.
The government's 30% stake in Bharti Hexacom is held through state-owned TCIL. However, the government's plans to exit mobile phone company Bharti Hexacom had been put on hold about two years ago after then cabinet secretary KM Chandrasekhar had asked the telecoms ministry to revisit the sale process. Bharti Hexacom has over 2 million subscribers and over 30% of the Rajasthan telecom market. In 2009, the telecoms department had decided that TCIL exit from Bharti Hexacom on account of two factors. First, TCIL had been seeking dividend payouts every year, a request that Bharti Group had turned down on account of the 'fact that it ( Bharti AirtelBSE -2.08 %) was using all its internal generation for expansion of network to keep up with the intense competition in the market.'
TCIL maintains that it is due to get dividend payment from 2004 onwards when Hexacom began making profits. TCIL had also sought listing of Bharti Hexacom, which too was turned down, on the grounds that the flagship company (Bharti Airtel) is already listed and as such their policy did not permit subsidiaries to be listed. Besides, as per the shareholders agreement, TCIL cannot insist on listing or getting dividend.
CAG will uncover instances of crony capitalism: Vinod Rai
Cambridge: Comptroller and Auditor General of India Vinod Rai, whose reports on various scams had raised hackles of those in government on Thursday said the public auditor would endeavour to uncover instances of crony capitalism and counselled the government to support enterprises per se and not entrepreneurs.
"We may not be able to wipe out corruption, but our endeavour is to uncover instances of crony capitalism. Government should be seen to support enterprise per se and not particular entrepreneurs," he said in a lecture at the Harvard Kennedy School here.
Rai, who was been criticised by the Indian government for reports on various scams like in telecom, coal etc, said adding the role of a public auditor cannot be confined to merely placing its report in Parliament.
He said: "Should we as public auditors limit our role to placing reports in Parliament or go beyond that and seek to sensitise public opinion on our audit observations especially so in social sector audits such as rural health, primary education, water pollution, environment, drinking water etc."
On the issue of the CAG exceeding its mandate, Rai observed that since the Indian democracy is maturing and the urban middle class is becoming more involved in citizen's affairs, "we continue to tread the new path in the belief that the final stakeholder is the public at large."
Maintaining that the auditing of government and public entities has a positive impact on trust in society, Rai said, "It focuses the minds of the custodians of the public purse to use resources effectively, as they know that after audit scrutiny, the public will be aware of their actions."
CAG's role, Rai said has evolved as from "being a bunch of fault finders who are often wiser by hindsight, we now recognise and report good practises that we observe during audit".
The public auditor, he said, was as much engaged in the business of upgrading public governance as any other agency in the administration.
"We do not subscribe to the We-They concept and hold ourselves to be on the same side of the table as the executive. Out audits have undergone a cultural change. We now engage in positive reporting", Rai said.
Observing that it was imperative for public auditor to appear objective and trustworthy, he said, "We can only deserve trust if we are judged as credible, competent and independent and can be held accountable for our operations".
Ground reality of much hyped electricity board debt recast
One of the initial steps announced by the Government in its latest burst of reforms dealt with debt restructuring of the State Electricity Boards (SEBs)
One of the initial steps announced by the Government in its latest burst of reforms dealt with debt restructuring of the State Electricity Boards (SEBs). This was considered as a major reforms measure as the total debt of the SEBs as per latest available estimates are around Rs 2.4 lakh crore and the completion of the restructuring process would have boosted growth in a critical sector of the economy. The debt restructuring processes called for the takeover by the States of 50 per cent of the debt of the loss making electricity boards and conversion into bonds that are backed by state guarantees. The remaining loans would be restructured by the lenders with a 3 year moratorium on principal repayments.
On paper this looked like a winning formula but the players seem to have found the going tough and a poor response from states has forced the government to extend the initial deadline of the scheme from 31 December 2012 to 31 March 2013. While several states have given in principal nod to the plan the real benefit will come when all the required conditions are met. Here are some of the reasons that are likely to have proved to be the roadblock in the entire process.
Tough medicine to swallow
The most likely condition that is likely to have resulted in the slow progress in the whole process is that the bailout proposed tough measures that need to be met at the ground level. These are good in the economic sense as they impose discipline and will improve the financial position of the SEB in the long run but with several state as well as Lok Sabha elections looming around the corner it is difficult to see many states willing to bite the bullet. Some of the tough measures required were adjustment of fuel costs on a quarterly basis and timely tariff revision. This means that states have to raise the price for the end user, which means additional burden on the people who are already reeling under high inflation from all side. There is also a point about advance payments towards subsidies provided by states to the agriculture sector.
The Central Government has also not provided Statutory Liquidity Ratio (SLR) status to the bonds that will be issued by the SEB in the restructuring process. This makes the bonds less attractive for lenders and hence would require a lot of persuasion in finding takers for the instruments.
Time in actual implementation
The bailout scheme has multiple players involved and while the bailout looks extremely good for the distribution arm of the SEB this needs some work by the states especially since they have to take over half of the debt. The states own financial situation in many cases is not too good and with the massive pile up of debt by the SEBs it will require long term planning to adjust this with the States financial position.
The process that was put in place for the entire scheme to be operational called for the approval to be taken from the state cabinet as well as the electricity regulatory commission. This is not an easy matter and the completion of this requirement will take some time because this can be quite significant in terms of procedure to be followed. In addition some states have also appointed consultants to advise them in this particular area which means that this is taking time in getting the final proposals through the entire process.
Position of banks
One of the issues was that banks had to be careful due to the provision norms that they face. Restructured advanced need a provision of 2.75 per cent (which has now been raised further) while standard advances require a provision which far less at 0.4 per cent. Banks also need to provide for the reduction in the net present value of the loan once it is restructured. This can be avoided by the banks after getting the necessary regulatory approval. Completing this approval process requires some time and effort and this can slow things down. Now there has been a comprehensive review and banks will be subject to lower provisioning for this restructuring which is good news for the times ahead.
The writer is a certified financial planner