Divestment, exports, infra get govt push

The Cabinet on Wednesday cleared the sale of a 10 per cent stake in Coal India, restored interest subvention for merchandise exports, directed compensation for stalled road projects, empowered the ministry concerned to clear road projects up to a cap on costing and for the first time gave production subsidy directly to sugar farmers.

The slew of measures would revive market sentiments, investments and economic growth. The government had also liberalised the foreign investment regime last week to boost the market.

MAJOR CABINET DECISIONS

• Cabinet okays 10% stake sale in Coal India, eyes  Rs 20,000 crore
• Three per cent interest subvention scheme to be applicable from April 1, 2015, to boost exports
• Faster clearances for road projects, as ministry empowered to clear projects worth up to Rs 1,000 cr
• CCEA okays production subsidy of Rs 4.5 a quintal of cane crushed for sugar directly to growers

The Cabinet also gave a nod to a marketing margin of Rs 150-200 per standard cubic metre charged by gas retailers like Reliance Industries and GAIL (India) for urea and liquefied petroleum gas plants. This was based on recommendations of the Petroleum and Natural Gas Regulatory Board.

The government is expected to mop up Rs 20,000 crore from the Coal India disinvestment, power minister Piyush Goyal said at a press briefing. At current prices, the 10 per cent stake sale could fetch Rs 21,137.71 crore. Shares of Coal India, in which the government holds a 79.65 per cent stake, rose 0.83 per cent to Rs 334.95 on Wednesday.

The Cabinet Committee on Economic Affairs also cleared the initial public offer for Cochin Shipyard, for the government to offload a 10 per cent stake in the country's largest shipbuilding and repair facility.

Acquiescing to a pending demand from merchandise exporters, the Cabinet restored the three per cent interest subvention, to arrest falling exports. The move will have a financial implication of up to Rs 2,700 crore in a year. Merchandise exports declined for the eleventh month in a row in October, a period longer than the slump in the aftermath of the 2008 financial crisis. The subvention would be available for both pre- and post-shipment credits, Goyal said.

The government had earlier announced a revamped Merchandise Exports from India Scheme and raised the duty drawback rates for various products to help exporters.

The interest equalisation scheme, earlier called the interest subvention scheme, would be applicable from April 1, 2015, for five years and would be evaluated after three years, an official statement said.

The Cabinet also authorised the National Highways Authority of India to compensate road developers for delays not attributable to them. The move is expected to help clear 34 stuck highway projects. "The Cabinet has taken a bold decision to allow the ministry of road transport and highways to go into the merits of each case and wherever delays are not attributable to the developer to extend the tolling period if that should be required and take such measures that will revive these projects," Goyal said.

Similarly, to make way for increased compensation of land for road projects, the government broke cost of roads into civil and cost of acquiring land. It allowed road, highways and transport ministry to clear road projects entailing civil construction cost of up to Rs 1,000 crore.

The Cabinet approved the revised cost of Rs 2,774 crore for the rail-cum-road bridge project over the Ganga at Munger in Bihar. The bridge, stuck since 1997-98 for want of land and funds, is expected to be open to rail traffic in the middle of 2016. "This is the first Cabinet meeting after the results of the Bihar assembly elections. The central government stands committed to the people of Bihar, irrespective of political results," Goyal said. In another decision, the Cabinet cleared the production subsidy of Rs 4.5 a quintal of cane crushed for sugar. The subsidy will be given to farmers directly. Goyal said the National Democratic Alliance government had inherited Rs 22,000 crore dues by sugar mills, which had been reduced to Rs 6,500 crore by various measures.