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The Union cabinet on Wednesday took key decisions ranging from special gold schemes to spectrum trading, besides approving a policy for capital infusion in the EXIM Bank. Photo: HT
The Union cabinet on Wednesday took key decisions ranging from special gold schemes to spectrum trading, besides approving a policy for capital infusion in the EXIM Bank. Photo: HT

GST Bill placed on the backburner amid flurry of decisions

The govt decided to prorogue the monsoon session of Parliament, putting at rest speculation of a special sitting to pass the controversial GST Bill

Wednesday saw some key political and economic announcements. While the Election Commission announced the dates for the much-awaited Bihar assembly elections, which will be held in five phases from 12 October to 5 November, the Union Cabinet came up with a slew of financial measures at a meeting chaired by Prime Minister Narendra Modi. The government on Wednesday also decided to prorogue the monsoon session of Parliament, putting at rest speculation of a special sitting to pass the controversial Goods and Services Tax (GST) Bill.

Cabinet announcements: The Union cabinet on Wednesday took key decisions ranging from special gold schemes to spectrum trading, besides approving a policy for capital infusion in the EXIM Bank.

Gold schemes: The cabinet signed off on two gold schemes to realise the twin objective of monetizing India’s massive private holdings of the metal and discouraging its imports. If successful, the move will not only ease pressure on the country’s trade balance—India’s imports are dominated by crude oil and gold—but also convert gold into a productive asset. Here are 10 things to know about the two gold schemes, including how you can invest and the rate you will get.

Hike in dearness allowance: The Centre has increased dearness allowance (DA) for its employees by six percentage points to 119% from 113%, a move that will benefit 50 lakh employees and 56 lakh pensioners. “Every six months government reviews dearness allowance. This time we have decided to increase DA by 6% over the existing 113% rate," Jaitley told reporters after the Union Cabinet meeting.

The DA hike will take effect from 1 July. As per the agreed formula, the DA rate increase is an average of 12-month consumer price index-industrial workers from 1 July 2014 to 30 June 2015. In April, the government had hiked DA by 6% to 113% of the basic pay, with effect from January. DA is paid as a proportion of the basic pay.

Offshore wind energy: The National Offshore Wind Energy Policy, which was also cleared by the Cabinet, is aimed at harnessing wind power along India’s 7,600 km coastline. The decision paves the way for offshore wind energy development, including projects and research and development activities up to a seaward distance of 200 nautical miles, which constitutes the exclusive economic zone (EEZ) of the country.

India is already among the world’s top producers of electricity from windmills on land, with a capacity of more than 23,000 mw, but extending the success to offshore regions has not made much progress so far. Under the new policy, the ministry for new and renewable energy will be the nodal authority for offshore wind power, while the National Institute of Wind Energy (NIWE) will be the nodal agency to allocate offshore blocks for Wind Energy and coordinate with other ministries.

Telecom spectrum: The new spectrum trading guidelines will enable telecom operators to buy and sell unused spectrum among themselves, a move that may spur consolidation in India’s fragmented telecom industry and also help improve service quality by reducing the number of dropped calls. The move could ease the financial stress on some operators, allow others to add bandwidth and improve the quality of services in the world’s second-largest telecom market.

Meanwhile, Reliance Communications (R-Com) and Reliance Jio Infocomm are set to announce a pan-India spectrum sharing-cum-trading agreement as early as next week, which will give Mukesh Ambani-owned Jio more bandwidth options to offer 4G services across most parts of the country, according to The Economic Times. As reported earlier by Economic Times, with the government clearing spectrum-sharing norms, the two companies will sign an agreement that would enable Jio to offer 4G services over the 800 MHz band across 10 circles.

White-label ATMs: The government has also approved 100% foreign direct investment (FDI) under the automatic route for non-bank entities that operate cash machines subject to certain conditions in a bid to boost financial inclusion in the country. A non-bank entity that aims to set up the so-called white label automated teller machine (WLA) should have a net worth ( the latest audited balance sheet) of at least 100 crore and they should keep that amount at all times.

“This decision will ease and expedite foreign investment inflows in the activity and thus give a fillip to the government’s effort to promote financial inclusion in the country, including the Pradhan Mantri Jan Dhan Yojna," an official statement said.

Meanwhile, white-label ATM operators said this is the first of many steps to be taken in ensuring that the deployment of WLAs is widespread. Read more

Ex-post-facto nod to capital infusion in EXIM Bank: The government gave its ex-post-facto approval to 800 crore capital infusion made in the Export Import Bank of India (EXIM Bank). The capital infusion was made to support the future growth plans of the bank, reports PTI.

GST Bill: The Narendra Modi government’s move to drop plans for a special session of Parliament to pass the enabling GST legislation, marked a surprising climb-down. The volte-face came in the face of stiff opposition from the Congress to the bill in its current form. “There was a meeting of the cabinet committee on political affairs. It was decided to recommend to the President to prorogue the monsoon session. We will keep trying; we are in touch with all political parties," said finance minister Arun Jaitley.

There remains a question mark over whether the government will show the same zeal in pushing the legislation in the winter session as the ruling NDA alliance lacks the required numbers in the Rajya Sabha to get it through.

“We tried to make them understand but we have been told that this will continue," Jaitley said, referring to Congress’ opposition to GST.

Angry over being targeted on the GST bill issue, the Congress on Wednesday hit back at finance minister Arun Jaitley accusing him of resorting to “political kite flying" and charging him with bringing the country to deflation mode by his “continued mismanagement", according to a PTI report.

Responding to Jaitley’s statement, asking parties to show statesmanship, Congress spokesperson Randeep Surjewala said: “We would like to remind the finance minister that it was the Congress and its government that authored the GST (Bill). Even today, our opposition is not to the bill, but limited to only those parts which kill the soul and spirit of the real GST legislation."

“Which chief minister was opposing GST all these years? It was Narendra Modi who as chief minister of Gujarat had blocked it all these years," said leader of Opposition Ghulam Nabi Azad. Congress deputy leader in the Rajya Sabha Anand Sharma said the party was the “original author" of GST.

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