New investment fund for PSU scrips

Cabinet okays way out on public holding norms; green signal for rail rates body, MSP for minor forest produce & on crop loan subsidy

With only four working days for adhering to the minimum public shareholding norms, the Cabinet Committee on Economic Affairs (CCEA) has approved a mechanism to bring down the government equity in its six sick companies to the required 90 per cent or less.

The CCEA decided on Thursday that a Special National Investment Fund will be created to transfer shares of these companies — HMT, Scooters India, Hindustan Photo Films Manufacturing Co, ITI, Andrew Yule & Co and Fertilizers & Chemicals (Travancore) Ltd.

According to the Securities and Exchange Board of India’s minimum public holding norms, all government-owned units will have to have at least 10 per cent of public holding. This has to be met by the coming Thursday.

“The number of shares required to make the six companies compliant with the minimum public share holding will be transferred to the SNIF out of government share holding on an irrevocable basis, without any consideration (meaning, money changing hands,” an official statement said here.

This fund will be managed by independent professional managers. It will sell the transferred shares within five years. The funds realised from the sale would be used for social sector schemes of the government. How to sell the shares would be decided by an empowered group of ministers.

Of these companies, the government has equity stake close to 90 per cent only in Hindustan Photo Films. The rest have much more.

Railway Tariff Authority
A body to fix rates for freight, travel and other use on the railways is likely to come through an executive order. The cabinet on Thursday gave in-principle approval to the formation of a Rail Tariff Authority (RTA).

“Since setting it up through an Act of Parliament will take some time, the law ministry and railways will examine whether it will be set up through an executive order,” Law Minister Kapil Sibal told reporters on Friday.

The two ministries would also work on details for its formation and on periodic suggestions on rates, taking into account input costs and  market conditions.

RTA will be a five-member body, headed by a chairman. “We need to take it forward through executive action,” Sibal added. The Authority, mooted by former railways minister Dinesh Trivedi in his budget for 2012-13, is aimed at depoliticising the issue of fixing the rates.

MSP for forest produce
Forest produce is to now get a minimum support price. The cabinet on Thursday approved a scheme to this effect, to help gatherers, who are primarily from the scheduled tribes and tend to reside in areas affected by left wing extremism.

The Centre will bear an estimated cost of Rs 967 crore and the states concerned for Rs 249 crore in the 12th five-year plan ending March 2017. To be covered are tendu, bamboo, karanj, mahuwa seed, sal leaf, sal seed, lac, chironjee, wild honey, myrobalan, tamarind, and gums (gum aaraya).

The scheme will cover forest produce in Andhra Pradesh, Chhattisgarh, Gujarat, Madhya Pradesh, Maharashtra, Odisha, Rajasthan and Jharkhand. The idea for this scheme had been announced by Prime Minister Manmohan Singh earlier.

Interest subsidy for farmers
The cabinet has approved continuation of the two per cent interest subvention to provide short-term crop loans to farmers, at seven per cent for loans up to Rs 3 lakh. Those repaying on time will get three per cent more interest subvention or loans at four per cent.

The estimated cost on this for 2013-14 is Rs 15,385 crore.

The government will also provide interest subvention at seven per cent to small and marginal farmers having kisan credit card loans against negotiable warehouse receipts for the post harvest period, at the same rates as those available for crop loans, for another six months. The estimated additional budgetary implication would be Rs 264 crore.

Govt holdings in select companies

	Government Holding
HMT	98.8%
Fertilizers & Chemicals (Travancore) Ltd	98.56%
Scooters India Ltd	95.38%
Andrew Yule & Company Ltd	93.30%
ITI Ltd	92.98%
Hindustan Photo Films Manufacturing Co. Ltd	90.63%