In another instance of Indian tax authorities adopting a hard-nosed stance to prevent abuse of tax avoidance treaties, the revenue department recently opposed a proposal of a Cyprus-based company to increase its stake in an Indian telecom services company from 40 per cent to nearly 74 per cent.
The wholesale price index based inflation rose to 12.44 per cent for the week ended August 2. Wheat has a weight of 1.38 per cent in the index. The department of economic affairs and the department of food and public distribution are in favour of selling 4 million tonnes wheat.
Pensioners to get 40% raise, more gains for octogenarians. The Union Cabinet has accepted this proposal, along with other recommendations of the Sixth Pay Commission on pension benefits for the estimated 3.84 million central government pensioners at a meeting here on Thursday.
Oil ministry officials say it is unlikely that the government will accept the BK Chaturvedi Committee's recommendation for raising the retail prices of petrol and diesel as it faces general elections in less than a year. The move also risks putting pressure on inflation, which has already crossed a 13-year high.
Private and public sector oil producers, who will face a "super profits" tax on output when their selling price for crude oil touches $75 per barrel if the B K Chatruvedi committee's recommendations are accepted, say there is lack of clarity on whether they will continue to pay the current royalty of 20 per cent along with the proposed tax.
The 3G mobile licence bonanza is expected to generate over Rs 40,000 crore for the central exchequer this year, as a result of which the fiscal deficit may stand at 1.75 per cent of GDP in 2008-09, lower than the 2.5 per cent projected in the Budget. "The important thing, from a public finance perspective, is to remember that this is a one-time inflow and we should treat it as such," said Finance Secretary Subbarao.
Reliance Industries (RIL), India's largest company by market capitalisation, will begin producing gas from its Krishna- Godavari (KG) field, which is off the country's east coast, "by December" this year, a senior executive said.
The government allows the oil companies to sell only a quarter of the total quantum of bonds they hold at any time during a quarter, so as to ensure that the market is not flooded with oil bonds. It has not yet decided on how the subsidy burden will be shared across stakeholders, how much of the subsidy from the government account will be given in cash and how much in the form of bonds, says an official.
With state-owned oil marketing companies strapped for cash on account of selling products at subsidised rates, the Oil Ministry last week approached the Finance Ministry seeking oil bonds in advance for the second and third quarters of the current fiscal 2008-09.
The government may defer the implementation of the sixth Pay Commission award by a year or even two to reduce the fiscal burden of the recommendations that proposed a 28 per cent across-the-board salary increase for an estimated 4.5 million central government employees. The report of the commission headed by Justice BN Srikrishna was submitted to the government on March 24 this year, nearly a fortnight before its 18-month tenure was to end.
Even as state-owned refineries recorded all-time high margins during the first quarter, gaining from inventories they hold, Reliance Industries, which operates the world's third largest refinery, posted a modest gain in margins, resulting in the company recording lower-than-expected profits during the quarter.
A committee of secretaries is considering a Rs 4,000-crore (Rs 40 billion) market intervention fund to provide states interest-free loans to augment foodgrain and edible oil availability, among other items. The money will enable states to intervene in the market by buying and distributing essential items to economically weaker families that are eligible for government assistance.
The finance ministry wants the central bank to permit corporate houses to use FCEBs for import of capital goods. The ministry said RBI's proposal to limit the use of the instrument only for financing overseas acquisitions by Indian companies is "too restrictive."
The government's decision to raise fuel prices in June has scuttled the oil companies' plans to reduce their losses from retail fuel sales as consumers are buying less of premium fuels, which is more expensive than normal fuels.
However, portability services, which were earlier expected to be launched by the end of the year in the four metros -- Delhi, Mumbai, Kolkata and Chennai -- as well as Tamil Nadu, have now been delayed till February or March 2009 (the DoT has said that it will start operations six months after the licence is granted).
Storm clouds of a different kind are gathering on the macro-economic horizon and they have nothing to do with surging global crude oil prices. The monsoon has played truant across large parts of India, with western and southern India reeling under the impact of deficient and scanty rainfall
Swan Telecom, which has received licences to operate mobile phone services in 13 out of the 22 telecom circles in India, is in talks with foreign companies for diluting 26 per cent of its equity for around $470 million.
The top five decision makers in the oil ministry collectively have around 20 months of experience in the sector even as India, the third largest consumer of oil in Asia, struggles to keep pace with oil prices, which have doubled in the last one year.
Officials in the finance ministry are not happy with credit rating agency Fitch's revision of India's local currency outlook to negative from stable. Officials say Fitch's conclusion that the central government's fiscal deficit will rise to 4.5 per cent of gross domestic product in 2008-09, as against 2.8 per cent in the previous fiscal, is wrong.
Soon after the trust vote in Parliament on July 22, the finance ministry hopes to push through a series of non-legislative reforms, chief among them disinvestment of minority stakes in around 10 central public sector undertakings by listing them on the stock market.
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