Structural reforms in 8 key sectors to boost economy: Sitharaman
NEW DELHI, May 16: Finance Minister Nirmala Sitharaman on Saturday announced the fourth tranche of the Rs 20 lakh crore economic stimulus package focussing on structural reforms in various crucial sectors of the Indian economy. The reforms will provide an impetus to those sectors which are new areas of growth, unleash new investment opportunities, lead to more production and in turn generate more jobs, the minister said.
“We are going to focus on a total of eight sectors today -- Coal, Minerals, Defence Production, Air Space Management and Airports, MROs, Power Distribution Companies, Space and Atomic Energy,” Sitharaman said at the daily news briefing to announce the Centre’s detailed economic package.
“Many sectors need policy simplification, to make it simpler for people to understand what the sector can give, participate in activities and bring about transparency. Once we decongest these sectors, we can boost the sector, for growth and additional jobs,” the finance minister said. Incentive schemes for the promotion of New Champion Sectors will also be launched in Solar PV manufacturing and advanced cell battery storage among others.
Referring to inclusiveness for states, the minister said states would be ranked on investment opportunities and the ability to attract new investments. “Schemes will be implemented in states through challenge mode for Industrial Cluster Upgradation of common infrastructure facilities and connectivity,” the finance minister said. In a consolidated effort towards a self-reliant India, policy reforms will be put on fast track and the ease of doing business will be further upgraded.
Announcing the introduction of commercial mining in the coal sector, Sitharaman said, “The government will introduce competition, transparency, and private sector participation in the Coal sector through revenue sharing mechanism instead of the regime of fixed rupee per tonne.”
“Commercial mining is being introduced in the coal sector and the age-old government monopoly is being removed. The commercial mining of coal will be done on a revenue sharing basis. An amount of Rs 50,000 crore is being provided for evacuation infrastructure in the coal sector,” Sitharaman said.
Regulations are required when there is a shortage of raw material. Coal is not environment-friendly and it needs to be kept in mind that the country’s environment commitments are honoured while converting coal into gas or other fuel, the minister said.
At least 500 mining blocks would be offered through an open and transparent auction process for the commercial mining initiative. There will also be a joint auction of bauxite and coal mineral blocks to enhance the Aluminum industry’s competitiveness.
“The investment of Rs. 50,000 crore is for the evacuation of enhanced CIL’s (Coal India Limited) target of 1 billion tonnes of coal production by 2023-24 plus coal production from private blocks,” the finance minister said.
There will be rationalisation of stamp duty payable at the time of awarding mining leases. The distinction between the captive and non- captive mines will be removed to allow transfer of mining leases and sale of surplus unused minerals in the Mineral sector. The Ministry of Mines is in the process of creating a Mining Index for different minerals as part of the structural reforms.
In defence production, the finance minister said for self-reliance a list of weapons and platforms will be notified and a ban imposed on import with year-wise timelines. There will be indigenisation of imported spares so that defence equipment is both made and bought in India
“We shall notify a list of weapons and platforms that will not be allowed for import…these will be banned and have to be bought in India. Those list of items which will be notified can now only be bought in India by the defence sector. To improve the autonomy accountability we intend to start corporatization of ordinance factory boards for better management and for subsequent listing on the stock market,” the minister said.
Foreign Direct Investment limit in defence manufacturing under the automatic route is being raised from 49% to 74%, the government has decided.
In Civil Aviation, Sitharaman indicated that “Restrictions on the utilisation of Indian Air Space will be eased so that civilian flying becomes more efficient. We will bring a total benefit of Rs 1000 crore per year for the aviation sector.”
A total of six airports will be up for auction by the Airports Authority of India (AAI) and it will be done on a Public Private Partnership basis. India will also be promoted as a MRO hub to save on additional costs for the aviation sector.
Sitharaman on Saturday also announced that electricity distribution companies in Union Territories (UTs) will be privatised. A tariff policy that does not burden consumers with distribution companies’ inefficiencies will be guaranteed, she said while presenting the fourth tranche of the economic stimulus package.
She also announced a hike in viability gap funding (VGF) for development of social infrastructure. In her fourth tranche of economic stimulus, she said Rs 8,100 crore will be provided as viability gap funding for development of social infrastructure.
The finance minister said social infrastructure projects suffer from poor viability. Therefore, the government will enhance the quantum of viability gap funding up to 30 per cent each of the total project cost as VGF by central and state/statutory bodies. For other sectors, existing VGF support of 20 per cent each from the government of India and state/statutory bodies shall continue.
For boosting private participation in space activities, the Centre will provide a level playing field for private companies in satellites, launches and space-based services.
Also, the government will provide predictable policy and regulatory environment to private players, she said. The move ensures giving the private sector a role in India’s space programme, including in satellites, launches and space-based services.
Future projects for India’s space programme and planetary exploration and outer space travel would be open for the private sector, the finance minister said, adding liberal geo-spatial data policy will provide remote-sensing data to tech-entrepreneurs in the country.
This is the fourth phase of announcements by the Union Finance Ministry elaborating on the Centre’s Rs 20 lakh crore economic stimulus package.
Over the last few days, Sitharaman has been convening daily media briefings to put forth Prime Minister Narendra Modi’s vision and share more details on the economic package meant to revive the industry grappling with a 54-day nationwide lockdown. The lockdown had been imposed towards the end of March to contain the spread of the Covid-19 pandemic.
Reliance Industries' $7 billion rights issue to open on 20 May
MUMBAI, May 16: Mukesh Ambani-led Reliance Industries Ltd (RIL) on Saturday said it will open its Rs53,215 crore ($7 billion) rights issue for subscription on 20 May, according to a stock exchange filing.
The rights issue will close on 3 June, the filing said.
As part of the proposed rights issue, shareholders of RIL will be offered one new share for every 15 held at ₹1,257 apiece. This is the first rights issue by India’s most valuable firm in three decades.
The issue will be structured as partly paid shares and will enable shareholders to phase out the outlay on their investment over a period of time.
Shareholders who subscribe to the rights issue will have to pay ₹314.25 per share at the time of application and the rest Rs942.75 in one or more subsequent tranches as determined by the firm.
Mint had reported on 7 May that RIL has appointed nine investment banks for its proposed rights issue.
Foreign banks Citigroup and Morgan Stanley, and Kotak Mahindra Capital, JM Financial Ltd, Axis Capital and ICICI Securities in the domestic space, have been appointed to manage the country's largest share sale.
The rights issue is part of RIL's plans to become a zero net-debt company by the end of March 2021. The company's net debt was at ₹1.53 trillion as of 31 December.
Excise duty on petrol raised by Rs 10, diesel by Rs 13 per litre
NEW DELHI, May 5: The Centre on Tuesday evening raised the excise duty on petrol by Rs 10 and on diesel by 13 per litre to recoup some of the loss of revenue suffered by the government due to the Covid-19 lockdown.
The change in duties will come into effect from 6 May, an official notification said.
The change in the tax structure will not impact the retail sale price of petrol and diesel on account of the excise duty hike.
A central government official said the revenue generated from these duties shall be used for infrastructure and other developmental items of expenditure.
A Re 1 per litre increase in excise duty on petrol and diesel usually means an additional Rs 14,500 crore in annual revenue to the government. But the revenue will accrue only when demand for the fuel, curtailed due to the extended lockdown, rises substantially.
The Centre’s move comes a day after the Aam Aadmi Party government in Delhi increased value-added tax (VAT) on petrol and diesel to raise money to fight the coronavirus disease. This decision had increased the price of petrol by Rs 1.67 per litre to Rs 71.26 and diesel, by Rs 7.10 to Rs 69.39.
That decision was sharply criticised by the Bharatiya Janata Party and the Congress in Delhi. Outside of politics, there has been some recognition that this might be the only way for governments that are running out of money to pay employees salaries.
By evening, Congress-ruled Punjab decided to hike the price of petrol and diesel by Rs 2 per litre. Telangana’s K Chandrasekhar Rao, on the other hand, announced the decision to raise the price of liquor by 16 per cent.
A few hours later, came the Union finance ministry order.
This is the second time since March that the Centre raised duty on petrol and diesel.
On March 14, the Centre had raised duties on petrol and diesel to Rs 3 per litre. That hike had raised the total central levies on petrol to Rs 22.98 per litre and on diesel to Rs 18.83 per litre. The retail price of the fuel had, however, remained unchanged because of the decline in crude prices.
Since March 16, oil companies have abandoned the practice of daily revision of the two fuel rates, making up for present and potential inventory losses.
Wall Street falls on US-China tensions
NEW YORK, May 1: Wall Street stocks opened sharply lower Friday on weakness in Amazon and Apple shares following earnings reports and tensions over blame for the coronavirus between China and the United States.
About 20 minutes into trading, the Dow Jones Industrial Average stood at 23,900.59, down 1.8 percent.
The broad-based S&P 500 shed 1.9 percent to 2,856.13, while the tech-rich Nasdaq Composite Index also dropped 1.9 percent to 8,712.53.
Amazon and Apple, two of the biggest companies by market capitalization, both fell in the wake of results released after the closing bell Thursday.
Amazon dove 5.8 percent after the company cautioned that earnings in the second quarter would be entirely wiped out by expenses related to COVID-19 as it works to keep up with surging demand at a time when many brick-and-mortar stores are closed.
Apple shed 1.0 percent as it reported lower profits, with the pandemic hitting the iPhone maker on multiple fronts, disrupting its retail operations, suppliers in China and the finances of its customers.
Analysts also pointed to comments from President Donald Trump claiming that the coronavirus originated in a Chinese lab.
The US president threatened tariffs on Beijing, escalating a blame game between the two biggest economies and reviving investors’ trade war worries.
LPG cylinder price cut by over ₹160
NEW DELHI, May 1: In the third consecutive rate cut, the price of LPG cylinders was reduced by ₹162.50 a unit in Delhi today. Oil marketing companies have enforced similar rate cuts in other parts of the country. In Delhi, the price of a 14.2 kg non-subsidised LPG (liquified petroleum gas) cylinder has been reduced from ₹744 to ₹581.50 with effect from today.
In Mumbai, LPG cylinder will cost ₹579, as compared to ₹714.50 earlier. In Kolkata, cooking gas fuel rate has been cut by ₹190 to ₹584.50. In Chennai, LPG cylinders will be sold at Rs 569.50.
LPG cylinder rates, which are revised on the first day of every month, had been on an increasing mode from August last year before prices were cut in the last two months amid a slump in the global energy market.
Ever since the coronavirus-related lockdown began from March 25, panic buying of LPG cylinders have been reported in most parts of the country. Retailers have been emphasising that there is no shortage of LPG cylinders in the country as there is enough stockpile of the gas to meet local demand.
India's largest fuel retailer Indian Oil Corp. Ltd (IOC) said it has reported a 20% spike in sales in April.
The price of LPG cylinders in India is dependent primarily on two factors — the international benchmark rate of LPG and the exchange rate of US dollar and rupee.
Cooking gas is available only at market prices across the country but every household is entitled to 12 cylinders of 14.2 kg each at subsidised rates in a year. The subsidy is transferred directly to bank accounts.
After the lockdown was enforced, the Narendra Modi government has started a new Pradhan Mantri Garib Kalyan Yojana (PMGKY) to provide 3 LPG cylinders free to over 8 crore beneficiaries of the Pradhan Mantri Ujjawala Yojana (PMUY) from April to June this year.
Oil marketing companies have been transferring an advance equal to the retail selling price of one 14.2 kg refill or one 5 kg refill depending upon the type of package to the linked bank account of PMUY customers. The customers can use this advance money to take LPG refill.