The Cabinet meeting held on Thursday evening resulted in the granting of approval to various pending decisions ranging from levying of import duty on power equipment, demerger of VSNL's surplus land, extension of the MB Shah Commission and amendments to the Forward Contracts Regulation Amendment Bill 2010. It also okayed sale of 10.82% of its stake in Steel Authority of India (SAIL).
Siddharth Zarabi, Economic editor, CNBC-TV18 says that in today's meet the Cabinet finally made up its mind on the issue of demerger of VSNL land issue.
The details of the meet on the issue points out that Tata Communications, the company which run and operates VSNL, will not in any way stand to gain from this land demerger. Government and private stakeholders of VSNL will be the two key beneficiaries. VSNL is the first Indian PSU to be listed overseas.
They will stand to gain from this SPV, which has been created because that is where the valuation will come in as far as their pre divesting shareholding is concerned.
Will the government now put in place plans, which were to divest this land over a period of time, realise value and reduce the fiscal deficit. The fact is that at this point of time it is unlikely that there would be such a move at least in Phase I.
What the government has put in place a separate SPV and therefore ensure the rights of pre VSNL divesture shareholders. Subsequent to that we could see some other moves as far as unlocking value is concerned, but it is early days as far as unlocking value is concerned.
The government also approved the sale of 10.82% of its stake in Steel Authority of India (SAIL), which may fetch the exchequer over Rs 4,000 crore. The Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Manmohan Singh, this evening has cleared SAIL public offer, official sources said.
The share sale process, proposed to be conducted through auction route or offer for sale, is expected to fetch over Rs 4,000 crore to the government, they added.
The Disinvestment Department will decide on the timing of the issue depending upon market conditions. The government currently holds 85.82% stake in SAIL. Shares of SAIL closed at Rs 93.10, down 0.16% over previous close.
Import duty on power equipment
The cabinet has also decided to slap 21% duty on imports of power equipment, mainly to protect domestic companies from cheap Chinese shipments.
The Cabinet has approved 5% basic customs duty, 12% counter-veiling duty and 4% special additional duty on import of power gear. Earlier this month, the power ministry had floated a proposal seeking higher duty on import of equipment for the power sector.
At present, equipment imported for projects of less than 1,000 MW capacity attract 5% customs duty, while those above that enjoy exemption.
Hike in sugarcane price
A 17% hike in sugarcane price that mills pay to farmers to Rs 170 per quintal for 2012-13 was also approved.
"The Cabinet Committee on Economic Affairs (CCEA) has approved the hike in the Fair and Remunerative Price (FRP) of sugarcane to Rs 170 per quintal for 2012-13 marketing year (October-September)," sources said.
The FRP, the minimum price that sugarcane farmers are legally guaranteed, for the ongoing marketing year stands at Rs 145 per quintal.
It also extended the term of Justice M B Shah Commission, which is probing the issues of illegal mining of iron and manganese ore, by another year.
(With inputs from PTI)