The Cabinet Committee on Economic Affairs on Wednesday approved a 10 per cent disinvestment in Coal India, the third government stake sale in the company's history. The government is expected to get around Rs.20,000 crore from the disinvestment.
At the company’s current market capitalisation, a 10 per cent stake sale will fetch the government around Rs. 21,100 crore. While announcing the Cabinet’s decision, Coal and Power Minister Piyush Goyal said that the government was looking to mop up Rs.20,000 crore from the disinvestment in Coal India.
If the government attains its target amount from the Coal India stake sale, this will go a long way in meeting the disinvestment target of Rs.69,500 crore for this financial year. So far, the government has been able to pare its stake in only four companies — Power Finance Corporation, Rural Electrification Corporation, Dredging Corporation and Indian Oil Corporation — and has earned only Rs.12,600 crore.
The Department of Disinvestment has reportedly asked for the disinvestment target to be brought down to Rs.30,000 crore. If this happens, then a successful Coal India stake sale could see the government overshooting its target.
The date and price of the stake sale is yet to be decided, Mr.Goyal said. The Cabinet also approved the IPO of Cochin Shipyard, the first IPO among the major ports.
The CCEA also approved a three per cent interest subvention scheme for SME exporters in a move to boost exports.
“The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Mr. Narendra Modi, has given its approval for Interest Equalisation Scheme (earlier called Interest Subvention Scheme) on Pre & Post Shipment Rupee Export Credit with effect from April 1, 2015 for five years,” the government said in a release.
“The Cabinet’s initiative to extend three per cent interest subsidy to exporters would give a much-needed boost to exports which have contracted by 18 per cent in the year so far,” said Mr. Chandrajit Banerjee, Director General, CII.
Mr. Goyal made clear that the fall in exports was in value and not volume. “The major factor behind the fall in exports has been petroleum products. India refines petroleum products and exports them. Due to the fall in global oil prices, the value of these exports have been falling. This also means that the value of imports have also been falling,” he said.
While global exports have been falling, India’s performance has been very heartening, he added.
Mr. Goyal also announced that the Cabinet had given its approval to several moves that would empower the National Highway Authority of India to get stalled projects moving. The first has to do with allowing NHAI to extend the tolling period for concessionaires who have been facing project delays for no fault of their own, such as unavailability of land or relevant clearances.
The second involves authorising NHAI to pay compensatory annuities to the concessionaire corresponding to the actual period of delay, when the delay was not attributable to the concessionaire.
“The main object of the proposal is to revive the languishing highway projects in the country. It will facilitate uplifting the socio-economic condition of the entire nation due to increased connectivity across the length and breadth of the country leading to enhanced economic activity,” the government said in a release.
In a move that should significantly expedite project approvals, the Cabinet approved a mechanism by which the construction cost of a project will be segregated from the cost of land acquisition, centages and pre-construction activities.
At the moment, standard practice is that all national highway projects need to get investment approvals and clearances at various levels, which lead to delays. Under the new system, only projects with a civil construction cost of more than Rs.1,000 crore need Cabinet approval. The rest need approvals only at the level of the Roads Ministry. The Cabinet also gave its approval for an investment of Rs.8,349 crore for the laying of multiple freight-specific rail lines in Odisha, Chhattisgarh and Andhra Pradesh. It also approved the doubling of several railway lines to increase freight traffic and improve commuter convenience.
The Union Cabinet also approved a slew of international agreements, including a tripartite agreement with Brazil and South Africa for a fund to alleviate poverty and hunger, an MoU with Germany on security cooperation, an amendment to the India-Kuwait Double Tax Avoidance Agreement, a ratification of the Articles of Agreement (AoA) of the Asian Infrastructure Investment Bank, a two-year extension to the currency swap arrangement with the SAARC countries, and a revised air service agreement with New Zealand.
