EPF rate: Govt. rules out budgetary support
New Delhi: The Left parties have said that they want the hike in the EPF interest rate to be much higher than 9.5 per cent. The Finance Ministry in turn has made it clear that it won't pay for the higher interest rates, for even at the current rates finding the funds will be a problem.

Expenditure Secretary, D Swaroop, said, "The EPF board will have to generate its own resources to pay for the 9.5 per cent interest and there'll be no budgetary support from the government."

Till now, the EPF corpus had been able to maintain reasonably high interest rates because government bonds, in which it had invested primarily, assured a higher rate of return than what was paid out to employees. Ever since government bonds stopped performing as well as they used to, the fund has been eating into its corpus.

It's estimated that the EPF corpus will need an additional Rs927 crore this year to pay what the government has promised, which could get even worse if the Left and trade unions have their way and get an even bigger hike.
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Panel proposals: Additional burden of Rs.26,000 crore
New Delhi: The Union Cabinet's decision to implement in toto the Twelfth Finance Commission's (TFC) recommendations may entail additional burdens of around Rs26,000 crore in the ensuing fiscal.

According to the Expenditure Secretary, D. Swarup, of the Rs26,000-crore, Rs 4,000 crore would be due to the move to transfer 30.5 per cent of the net proceeds of the Centre's taxes and duties to State Governments, against the present 29.5 per cent devolution.

The other source of revenue loss would arise from the decision to consolidate all Central loans to States contracted till March 31, 2004, and outstanding on March 31, 2005 (Rs1,28,795 crore) and reschedule these for a fresh term of 20 years at an interest of 7.5 per cent. This would translate into a loss of about Rs4,000 crore in interest receipts and Rs2,500 crore - Rs3,000 crore in repayments to the Centre.

Over and above, the Centre would also incur additional expenditure of roughly Rs15,000 crore as grants-in-aid to States in accordance with the Commission's recommendations. So, all put together, the Centre will have to muster additional resources of Rs26,000 crore following its decision to accept the recommendations.

But a major proposal of the TFC relates to the stipulation that any transfer from the Centre to the States henceforth (including Plan assistance) will not take the form of loans. This is against the current arrangement, where 70 per cent of the Plan assistance is given as loans and 30 per cent as grants, with the grant portion being 90 per cent for special category States. What is being proposed now is that the Central loan component would be done away with and the States mobilise the same amount directly from the market.

To that extent, the Centre's assistance to State Plans and Central & Centrally-sponsored Plan schemes would come down by Rs27,250.34 crore (Budget estimate for 2004-05), thereby entirely offsetting its Rs26,000 crore additional burden on account of implementing the proposals.
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Gross tax collections rise 18 per cent
New Delhi: The Finance Ministry has expressed confidence that the overall tax collection during 2004-05 fiscal would be on target even though there might be some shortfall on the excise front.

Excise duty collections during April-December 2004 stood at Rs68,425.86 crore, an increase of 7.56 per cent over April-December 2003 collections of Rs63,616.69 crore.

The 2004-05 Budget target for excise was Rs1,09,199 crore, which represented an 18.20 per cent increase over the revised estimate of Rs92,379 crore for 2003-04. However, the growth in excise collections this fiscal has been lower than anticipated.

But the Centre's gross tax collections surged by over 18 per cent to Rs1,94,231 crore during April-December 2004, up from Rs1,64,170 crore in the year-ago period. Indirect tax collections registered a 12.23 per cent increase in the first nine months (April-December 2004) of the current fiscal at Rs1,17,856.86 crore (Rs1,05,011.03 crore).
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Ten private power projects heading for financial closure
New Delhi: About ten private sector power projects, with a cumulative installed capacity of around 9,000-10,000 MW, are expected to achieve financial closure over the next couple of months. All these projects will have tariffs of around Rs2 per unit.

Eleven independent private power projects with a capacity of 4,000 MW had already achieved financial closure in 2004. On the Tenth Five-Year Plan's (2002-07) aim of adding 41,000 MW, the country was more or less poised to meet the target. The Government is also taking measures to add 60,000 MW during 2007-12, Power ministry officials have said. Officials said that the Government has given a major thrust to hydel power generation to correct the mismatch in the hydel-thermal ratio, which had fallen to 76:24 in 2003. The country has a potential to generate 1,50,000 MW of hydel power.
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24 FDI proposals cleared
New Delhi: The Government has permitted a consortium of the Mauritius-based investment companies to pick up 38.35 per cent stake in Facor Alloys Ltd, involving foreign direct investment (FDI) worth Rs7.52 crore. The same consortium has also been permitted to pick up 30.05 per cent stake in Ferro Alloys Corporation Ltd, involving an FDI of Rs6.14 crore.

A total of 24 FDI proposals worth Rs33.81 crore have been cleared by the Finance Minister, P. Chidambaram.

The Mauritius-based Spectrum Technologies and CLI Operations Company Ltd's proposal to invest Rs9 crore in ST-CLI Coal Washeries Ltd for setting up coal washeries in Chhattisgarh has also been cleared by the Minister.

The Germany-based Rauschert Keramic Holdings Ltd's proposal to invest Rs6.83 crore in Rauschert India Private Ltd for undertaking trading activities, too, has received the go-ahead from the minister.
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