Govt fastracks reforms in coal, insurance sectors
The Cabinet on Wednesday approved key reforms in the coal and insurance sectors, auction of coal blocks and a hike in insurance FDI to 49% from the current 26%, which were stuck in Parliament logjam.business Updated: Dec 25, 2014 08:42 IST
The Cabinet on Wednesday approved key reforms in the coal and insurance sectors, auction of coal blocks and a hike in insurance FDI to 49% from the current 26%, which were stuck in Parliament logjam.
The two critical legislations could not be taken up in the Rajya Sabha, due to lack of cooperation from opposition parties, who did not allow the upper house to conduct business during the last few days of the winter session that ended on Tuesday.
A day after the conclusion of the Winter session of Parliament, the Cabinet approved promulgation of the Ordinance on Insurance Bill and re-promulgation of the Coal Ordinance.
The re-promulgation of the Coal Ordinance is necessary to facilitate auctions of 204 blocks that were cancelled by the Supreme Court in September, while the ordinance on Insurance Bill will operationalise reforms in the sector. A Parliamentary select committee has already given its report on the Insurance Bill.
The approval of the two ordinances by the Cabinet, chaired by Prime Minister Narendra Modi, aims to reiterate the government’s commitment to pursue reforms.
“The Cabinet today cleared the proposal for re-promulgation of the Ordinance (as the Rajya Sabha could not take up the Coal Mines (Special Provisions) Bill) and to raise FDI in insurance… this country can no longer wait even if one of the houses waits indefinitely to take up its own agenda,” finance minister Arun Jaitley said.
About $6-8 billion in foreign investment is estimated after liberalisation of insurance FDI.
The Centre will begin the auction and allocation of 101 coal blocks from February next year, but there is unlikely to be any hike in power tariffs. States that will benefit from this decision are those with maximum coal reserves including West Bengal Jharkhand, Odisha and Chhattisgarh.
Revenue earned from the auction will be passed on to respective state governments. MSTC will conduct the e-auction while SBI caps will be the financial advisers.
Coal secretary Anil Swarup said power tariffs will not go up, since the government will adopt reverse auction of coal mines. “The bidder will have to bid less than the amount set as cap for each mine. So if a cap is `700 per tonne for mining coal and the bidder offers `500 per tonne, then the balance `200 will be used to subsidise power tariff.”
The government will also undertake forward auction. About 36 blocks will be directly allotted to PSUs and 63 will be auctioned.