Govt hikes MSP for paddy

Govt hikes MSP for paddy
ENS ECONOMIC BUREAU

AUG 29: The Cabinet Committee on Economic Affairs (CCEA) on Tuesday revised royalty rates for major minerals, increased minimum support price (MSP) for paddy, accorded approval to BPL Communications' $ 200 million American Depository Receipts (ADRs) issue and cleared a project for the electrification of the Ernakulam-Trivandrum section of Southern Railway.

The proposed revision in royalty rates of major minerals, other than coal, lignite and sand for stowing, is expected to result in likely increase of 21.25 per cent in royalty accruals for major mineral producing states.

Briefing newspersons, an official spokesperson said, as per the decision, the government has retained the existing ad valorem rates of royalty for all the minerals for which ad valorem rates of royalty are being charged.

In tune with the international practice, ad valorem rates have been made applicable for 21 rates of royalty which cover 39 specified minerals and the single group of unspecified minerals. Presently, 17 groups of minerals and the single group of unspecified minerals attract ad valorem duty.

The committee also gave its approval to the ongoing coal and lignite promotional exploration programme during the Ninth Plan for drilling 7.20 lakh metre, four lakh metres in coal and 3.20 lakh metre in lignite, at an expenditure of Rs 147 crore. The programme under implementation since 1989-90 would continue in the Tenth Plan.

Accepting recommendations of the Commission on Agricultural Costs and Prices (CACP), the committee hiked the MSP for common paddy from Rs 490 to Rs 510 per quintal and for grade variety from Rs 520 to Rs 540 per quintal. The decision is estimated to increase the food subsidy bill by Rs 240 to Rs 360 crore.

The proposal of BPL Communications Limited, earlier known as BPL Cellular Holdings Limited, is for initial public offering of equity shares in the form of ADRs for $ 200 million, including a 15 per cent greenshoe option, through placement of ADRs with foreign institutional investors.

The approval is subject to the condition that the company will make investment in a licensee company for telecom services in accordance with the terms and conditions applicable to that particular service, will not operate any telecom service without a licence from the Department of Telecommunications and the management control of the company must rest with Indian shareholders with foreign equity percentage not exceeding 49 per cent.

The committee also approved the proposal for taking up electrification of 320 kilometre Ernakulum-Trivandrum railway line at an estimated cost of Rs 147.87 crore.

CCEA also approved availing of direct power supply from National Thermal Power Corporation in Bilaspur division of South Eastern Railway at an estimated cost of Rs 128.73 crore. The source of funding would be through internal generation of resources. Availing of NTPC power supply would leadto substantial reduction in traction energy bill.

The committee also approved the proposal for release of grants-in-aid amounting to Rs 171.58 crore during the Ninth Plan to Indian Council of Forestry Research and Education.

In addition, the " Forest Reseach Education and Extension" project, being executed by the institute with World Bank assistance, which was to terminate on December 31 last year, has been extended till December this year with the assurance that extension of one more year is likely to be granted. The initial amount of Rs 158.75 crore approved for the project is now being increased to Rs 192.46 crore.