Govt Allows Private Pfs To In Stock Markets - Aug 18, 2008

Nearly a fortnight after ending the monopoly of SBI in managing EPF accounts, the government on Aug 14 allowed private provident, pension and gratuity funds to invest up to 15 per cent of their corpus in stock markets, a step seen as a financial sector reform. Besides, norms regarding investment in securities have also been relaxed. Under the revised investment pattern, these can invest up to 15 per cent of investable funds in shares of companies on which derivatives are available in the Bombay Stock Exchange or National Stock Exchange, said a Finance Ministry notification.

Guidelines, which would be applicable with effect from April 1, 2009, have been issued following public feedback on draft proposals released last year.A senior finance ministry official had earlier said that government would impress upon the Employees Provident Fund, which has a corpus of over Rs 2,40,000 crore, to follow these investment guidelines. Earlier on July 30, the government allowed private players HSBC, Reliance Capital and ICICI Prudential to manage the incremental funds of EPFO, subscribed by over four crore employees, thus ending the monopoly of state-run State Bank of India.

Government has also allowed private funds to invest up to 55 per cent of their money in central and state government securities and gilt mutual funds.Private funds operated to provide social security to employees can now invest in term deposit receipts of not less than one year duration issued by scheduled commercial banks subject to specified financial criteria. A new category of instruments such as rupee bonds of multilateral funding agencies, money market instruments have been provided under the revised investment pattern. Besides, funds have been provided a flexible ceiling for various category of instruments instead of fixed investment ceiling as at present.

Govt Notifies Increase In FDI Limits

New Delhi: Giving effect to the Cabinet decision on relaxing FDI policy, the government on Wednesday issued six notifications raising foreign investment limits in sectors including civil aviation, petroleum refinery and commodity exchanges. The other sectors for which the FDI norms have been relaxed are industrial parks, credit information companies and titanium mining.

The press notes have been issued by the Department of Industrial Policy and Promotion following the decision of the Union Cabinet in January to remove restrictions on foreign investment in various sectors. The government has raised FDI limit in public sector refineries and commodity exchanges to 49 per cent. FDI up to 100 per cent would also be allowed in mineral separation of titanium-bearing minerals and ores, its value- addition and integrated activities subject to prior government approval.

In the civil aviation sector, the press note said 100 per cent FDI would be allowed under the automatic route for greenfield projects, while in existing projects, FDI up to 100 per cent would be allowed with prior government approval. As regards commodity exchanges, the foreign institutional investors (FII) would be allowed to attain a stake of up to 3 per cent while foreign investors can take up to 26 per cent.

Govt Slashes Exporters Subsidy By Rs 600cr

New Delhi: The government has cut allocations to its key export promotions and overseas market development programmes for 2008-09 by a vast Rs 600 crore, at a time when exporters are distressed on account of global slowdown and margin erosion due to rupee appreciation. The Budget has slashed export subsidy by Rs 300 crore while abolishing interest subsidy under the programme ''Assistance for Export Promotion and Market Development''. As against the revised estimates of Rs 1,594 crore for 2007-08, the export subsidy has been reduced to Rs 1,294 crore for 2008-09. The government had given Rs 300 crore as interest subsidy to banks for the current year. Upset with the Budget proposals relating to the export sector, Commerce and Industry Minister Kamal Nath had met Prime Minister Manmohan Singh earlier this week asking fiscal and other measures for the distressed exporters. Finance Minister P Chidambaram had said in the Budget that the interest cost of sterilisation via market stabilisation bonds, estimated at Rs 8,351 crore for the whole year, was in a sense subsidy to the export sector.

Govt Generous Towards Farm Sector: PM

Dubbing farmers as the ''most important businessmen'', Prime Minister Manmohan Singh on Friday said the government has been generous in its response to deal with the depression in agriculture sector while complimenting Finance Minister P Chidambaram for doing a very good job.

I sincerely believe the government has been generous in its response. It is an unorthodox response. But considering the amount of depression that prevails in the agriculture sector, this is a response mechanism that is justified, Singh said in his post-Budget comments.

Analysing the measures announced by Chidambaram in the Budget, he said the government would list some more Public Sector Undertakings and noted, ''''markets are thirsty for good new chips.

We have to explore all processes of enhancing our resources, including listing the enterprises in the markets, Singh said.

Listing out inflation and international recession as causes for concern, he said, We will have to tackle both worries. There is a worry that international recession will impact the growth process. Rise in commodity prices, petroleum prices will lead to more inflation. So, we have to strike a balance.

The Finance Minister has done a very good job. He has kept the fiscal deficit, the revenue deficit under control. Simultaneously, he has ensured if some adverse wind comes from outside the country, he has used the excise duty reductions, Singh said.

Govt To Appoint More Fund Managers For EPFO Corpus

The government on Saturday said it is planning to appoint more fund managers for the efficient management of the Employees Provident Fund Organisation corpus.There would soon be multiple fund managers to manage the fund of EPFO, which has over 4 crore subscriber.Currently, the country''s largest public sector lender State Bank of India is the sole fund manager.In line with managers for new pension scheme for government employees, EPFO would also have multiple fund managers for the efficient management of the corpus.When asked about whether the corpus of the EPFO can be invested in the stock market, Pillai said, no consensus has been arrived at on the issue.

Govt Clears 25 FDI Proposals Worth Rs 5,585 Cr

The government on Feb 13 approved 25 foreign direct investment proposals worth Rs 5,584.82 crore in various sectors, including a Rs 1,950-crore investment plan of Bycell Communications for starting mobile telephony in the country.The proposals approved by Finance Minister P Chidambaram also include a Rs 1,460-crore plan of J M Financial Trustee for induction of foreign equity by subscribing to private placement of units.

The Indian company is engaged in FDI compliant construction development projects, an official release said.Earlier, the Department of Telecom had withheld Letters of Intent to Bycell for launching mobile services in five circles. The investment plan of the company, which had applied for licences in Assam, Orissa, Bihar, North East and West Bengal circles in January 2006, also envisages raising of paid up capital.

Among other major proposals, Mumbai-based Dumeric Holdings Pvt Ltd''s Rs 400-crore proposal to convert status of operating company into operating cum holding company for making further downstream investments was also cleared.

Another proposal of same amount that was cleared was of KVK Energy & Infrastructure Pvt Ltd for induction of foreign equity in a company by way of subscription to fresh equity shares, fully convertible debentures or preference shares.

Govt Moots Relief Package For Farmers

The government is worried about mounting debt among India''s farmers and their ability to pay so Budget 2008 could see a huge write off of farm loans, according to finance ministry sources. The debt relief package could range between a massive Rs 60,000 to Rs 100,000 crore.

These estimates are based on farm loans disbursed upto December 2007. It is unlikely that there will be any cap on the size of the loan. If only marginal and small farmers are considered then the loan waiver would cost about Rs 60,000 crore. Such a massive loan waiver will be coming in the backdrop of a sharp dip in the growth forecast for agriculture. It is believed that this could seriously jeopardise the 9 per cent growth story of India.According to the Finance Minister P Chidambaram, the government''s highest priority is agriculture.Although the details of the debt relief package are still being worked out, finance ministry officials pointed out that the Centre and states might share the cost of the debt relief package.In addition there could also be a farmer cess, which could be levied on direct as well as indirect taxes just the way the finance minister raised the education cess by 1 per cent in the last budget.

Govt To Carry On Project Tiger In 11th Plan; Allots Rs 600 Crore

New Delhi: The government will continue with a central scheme called ''Project Tiger'' during the current 11th Plan and okayed an estimated Rs 600 crore for the purpose. According to Finance Minister P Chidambaram, the money would be used to rehabilitate people living in core area or critical tiger habitat and implement safeguard and retrofitting measures in the interest of wildlife conservation. He said the scheme would also rehabilitate and resettling denotified tribes involved in traditional hunting, and mainstreaming livelihood and wildlife concerns in forests outside tiger reserves.

The money would also be spent on establishing eight new tiger reserves in states like Tamil Nadu, Karnataka, Chhattisgarh and Assam, Chidambaram said. The government would also foster corridor conservation through restorative strategy to arrest fragmentation of habitats. The project also seeks to provide basic infrastructure for strengthening the National Tiger Conservation Authority and establishing a monitoring lab in the Wildlife Institute of India. A part of the outlay would go toward ensuring allowance to ministerial staff working in tiger reserves as well as to promote eco tourism.