Welcome Dividends

CIL PAYS A SPECIAL DIVIDEND, IOC-HZL STAKE SALE APPROVED 

In a bid to generate funds through PSUs, the government took some big ticket decisions at a brisk pace during the past fortnight. Both, the cabinet and the EGOM have acted in concert to fetch enough money so that India’s fiscal deficit can be contained at 4.8 per cent of GDP. 

Firstly, the world’s largest coal miner, Coal India’s board was asked to declare a special dividend which it did. The company will pay Rs 29 per share, which will result in an outflow of Rs 18377 crore to it. As the government holds a 90% stake in the company, it will get Rs 16500 crore. The CIL scrip plummeted by around 10 per cent at the bourses on the day it went ex-dividend.

At the same time, the Empowered Group of Ministers, headed by Finance Minister P Chidambaram has given a go ahead for the stake sale of IOC to ONGC-OIL India consortium via a block deal. This deal will fetch around Rs 4800 crore for the government. The Ministry of Petroleum and Natural Gas was aggressively opposing a 10 per cent stake sale in IOC owing to the bad valuations following market conditions. This mechanism was actually suggested by the Petroleum Ministry itself, so that a middle path can be taken. In yet another move, on January 21, the Cabinet Committee of Economic Affairs (CCEA) approved the residual stake sale in Hindustan Zinc via an auction route. The Government holds 29.5 per cent in HZL and at current prices it will fetch it around Rs 17000 crore.

SUBSIDIZED CYLINDER LIMIT TO BE INCREASED TO 12 

The Government is all set to increase the limit of subsidized LPG cylinders to 12 from the current level of nine. Petroleum Minister, M Veerappa Moily has reportedly said that the decision will be taken very soon and the cabinet will give its nod to it as early as January 24. With this increase, it is estimated that around Rs 4000 crore of additional subsidy will be befall the exchequer. During a very recent AICC meeting, congress vice president Rahul Gandhi had requested the Prime Minister to increase this limit of subsidized cylinders to 12 for the sake of party workers and women of the country. The Government is currently incurring more than Rs 45000 crore of subsidy on LPG cylinders, while overall fuel subsidy is pegged at Rs 1.40 lakh crore for the current fiscal.

GREEN SIGNAL TO AMRITSAR KOLKATA INDUSTRIAL CORRIDOR 

In a landmark decision the cabinet has given a go ahead to the Amritsar-Kolkata Industrial Corridor (AKIC) and the formation of the AKIC Development Corporation (AKICDC). AKIC is proposed to be developed in a band of 150-200 kms on either side of Eastern Dedicated Freight Corridor (EDFC), in a phased manner. It would comprise a belt of at least 5.5 lakh square KMs in the seven States of Punjab, Haryana, Uttarakhand, Uttar Pradesh, Bihar, Jharkhand and West Bengal. 

Phase-1 will be in the nature of a pilot project, during which at least one Integrated Manufacturing Cluster (IMC) of 10 square KMs each, in each of the seven States would be set up, as identifi ed by the respective State Governments. At least 40 per cent of the land in each IMC will be permanently earmarked for manufacturing and agro-processing, considering that substantial part of the area in these States, except Jharkhand, is under agriculture. A financial indicative commitment of about RS 5600 crore, spread over 15 years, by way of budgetary support from the Central Government has been estimated in the first pilot phase for setting up seven IMCs in the AKIC.

INTEGRATED INDUSTRIAL TOWNSHIP TO BE DEVELOPED AT GREATER NOIDA WITH AN INVESTMENT OF Rs 1714 CRORE 

Th e Cabinet Committee on Economic Affairs (CCEA) has approved the formation of 50:50 Joint Venture between Delhi Mumbai Industrial Corridor (DMIC) Trust and the Government of Uttar Pradesh for the development of trunk infrastructure of the integrated industrial township at Greater Noida. It will be in the Dadri- Noida-Ghaziabad investment region of the Delhi Mumbai Industrial Corridor. The total cost of the project would be Rs 1714.70 crore and this is proposed to be met by equity contribution of Rs 617.20 crore by the DMIC Trust and the State Government. The capital expenditure of Rs 480.30 crore will be met from internal accruals. The industrial township is expected to attract private sector investments of over Rs 33000 crore over a period of 30 years and will also generate significant employment (direct or indirect) and lead to a multiplier effect in each of the target sectors, including backward and forward linkages with other sectors of the economy.

CABINET APPROVES SETTING UP OF RAIL TARIFF AUTHORITY 

The Cabinet has recently approved the setting up of the Rail Tariff Authority, as an advisory body, through a Government Resolution, pending amendment of the Railway Act, 1989. Setting up of such an authority will institutionalise a regulatory mechanism at arms length for pricing of passenger and freight services. The Rail Tariff Authority shall comprise a Chairperson and four Members at the apex level and will be vested with the function to develop an integrated, transparent and dynamic pricing mechanism for the passenger and freight segments of the Indian Railway’s business.