Finance ministry clarifies issues on Cairn-Vedanta deal

The finance ministry says the government should decide on the Cairn-Vedanta deal irrespective of whether the dispute between Cairn and ONGC over royalty payments is resolved. 

The finance ministry has also added caveats to the proposed approval, which analysts say is the reason for the delay in the deal in getting a green light from the cabinet. 

The ministry has said the government should proceed by the 'letter and spirit of the contract' and necessarily follow legal provisions while granting approval.

Additionally, it has also advised the government not use the dispute as an 'opportunity' to resolve the royalty issue in its favour.

According to the ministry, India needed the kind of environment that would promote foreign investment. It has sought a legal view on the royalty cost recovery paid by ONGC.

 ''Legal view must be taken before taking the proposal to the cabinet. Legal view is a must for the cabinet. The Oil Ministry must consult its legal counterpart on future obligations,'' the finance ministry commented.