Week in review for 18 September 2009

Week in review for 18 September 2009

New Delhi: On Thursday the Union Cabinet met to clear several pending issues. It approved a Rs17,700 crore loan from Japan for the Western Dedicated Freight Corridor. The loans’ main condition is that all prime contractors must be Japanese. The Cabinet also extended the term of the 13th Finance Commission from October to January. But most interesting of all was its decision not to oppose Delhi high court ruling on de-criminalising homosexuality.

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The government’s efforts to create a single rate for its proposed goods and services tax suffered a setback this week. A meeting of finance ministers from India’s states and union territories decided on three different rates for different goods. These are a lower GST for mass consumption, a regular rate for other goods and a 1% charge on precious metals.

On Thursday the environment ministry laid out a proposal for an independent authority that will grant environmental clearances and ensure compliance with the law. Disputes over environmental clearances often lead to controversies and costly delays. They also spark off clashes between the judiciary and executive.

The proposal says the national environment protection authority should also oversee issues like environmental health and waste management. But its exact scope and powers will remain open to public debate until next month.

On Wednesday civil aviation minister Praful Patel said the government was committed to infusing equity in to Air India. He added that his ministry would also help convert the airline’s high cost debt into low cost debt. Air India currently has a debt of Rs16,000 crore.

Meanwhile Air India is shaping up to make itself eligible for government help. The airline is putting an end to its loss making routes and is trying to make sure its remaining flights are full when they fly. Also Air India’s board plans to meet next week to make a decision on wage cuts.

Anil Ambani’s RNRL spent much of the week trying to open new fronts in its legal battle against Mukesh Ambani’s RIL. On Monday RNRL asked the Supreme Court to allow it to intervene in the dispute between NTPC and RIL. And then on Wednesday it asked the Court to add NTPC as a party to its own legal case against RIL. RNRL claims it is necessary to connect the two cases because the stances RIL has adopted with both itself and NTPC are similar. But NTPC has reacted strongly and has said the two cases are unrelated.

After 14 weeks of fall, inflation rose in the first week of September with the Wholesale Price Index going up 0.12% compared to a year earlier.

NTPC is considering the option of bidding for a South African coal-mining firm in a deal worth about $1 billion. NTPC faces a huge shortage of coal even though more than 80% of its installed capacity runs on the fuel.

The government’s oil refining companies are set to buy a 10% stake in Oil India Limited. Bharat Petroleum and Hindustan Petroleum will each buy 5.35 million shares, while Indian Oil will buy 10.7 million shares in Oil India. The deal will be worth a total of Rs2,200 crore.

Petronet LNG plans to raise $1 billion in debt to build power plants of its own. The plants will be located next to its terminals in Gujarat where it already imports gas into India.

Royal Bank of Scotland or RBS has resumed talks with Standard Chartered about selling its assets in India, China, and Malaysia. Negotiations had broken down in August when the two banks couldn’t agree on a valuation.

Insurance regulator IRDA is considering regulation that will put an end to commissions on direct applications. Currently, customers have to pay insurance companies the same amount of commission even when they buy a policy directly.