News
Thursday, July 22 & 23, 2015
^ Top

Centre may allow states flexibility of having consent clause, SIA in land bill

Govt will invite pvt players to plan, build ITO infrastructure

Highways sector: Moving on the fast lane

Fund crunch tests mettle of steel industry

Joint panel on Land Bill gets time till Aug 3 to submit report

‘GST rollout hit by rate band, exclusions’
Centre may allow states flexibility of having consent clause, SIA in land bill
PTI,
July 22, 2015
Seeking to placate the Opposition on the vexed land acquisition bill, the Centre may
include a fresh section in it to allow state governments have the provision of a consent
clause and social impact assessment while implementing the law.
Sources in the government said today that inclusion of a fresh clause through an official
amendment is one of the various options being weighed.
According to the proposal, if some states want to have social impact assessment and seek
consent from farmers before acquiring their land, they will be free to do so.
Faced with a stalemate on the controversial land bill, the Union Cabinet had last night
discussed the issue amid suggestions that government may tweak some of its provisions
to make it palatable to the Opposition.
There are indications that Government plans to bring some official amendments to the
vexed bill, in order to take the Opposition on board.
Several states have opposed the "dilution" of provisions of the original Land Acquisition
Act of 2013 regarding the consent of farmers and exemption from social impact
assessment (SIA).
Another option before the government is to re-introduce the consent clause with certain
dilutions and having social impact assessment in some other form.
The discussion in the Cabinet came a day after Prime Minister Narendra Modi had
expressed agreement with the remarks of SP leader Ram Gopal Yadav that since there is
no consensus on the issue, both government and opposition should make some
adjustments to resolve the issue.
News
Referring to the protracted issue, Yadav had said on Monday in an all-party meeting that
both the government and the opposition should collectively endeavor adopting a give
and take approach to find a solution.
The Joint Committee of Parliament examining the controversial land acquisition bill was
today given an extension till the first week of August to submit its report. The Committee
was originally mandated to table its report on Tuesday -- on the first day of the Monsoon
session.
The bill to amend the Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act of 2013 has got stuck because of
opposition by various parties. Congress, led by Rahul Gandhi, is aggressively
campaigning against it.
While the 2013 law required the consent of 80 per cent of land-owners to be obtained for
private projects and that of 70 per cent for PPP ones, the present Bill exempts five
categories from this provision -- defence, rural infrastructure, affordable housing,
industrial corridors and infrastructure projects, including public-private partnership
(PPP) projects where the government owns the land.
The 2013 Act also required that a social impact assessment be conducted to identify
affected families and calculate the social impact when land is acquired. This provision
has been done away with.
Out of 672 representations that the committee received, 670 have opposed the
amendments being brought by the NDA government in the land bill, particularly
dropping the consent clause and social impact survey. So far, 52 representatives have
also appeared before the committee.
At least three of BJP's allies - Shiv Sena, Shiromani Akali Dal (SAD) and Swabhimani
Paksha besides a number of farmer and labour organisations attached with RSS like
Swadeshi Jagaran Manch, Bhartiya Kisan Sangh, Bhartiya Mazdoor Sangh and Akhil
Bhartiya Vanvasi Kalyan Ashram red-flagged a number of provisions of the proposed
legislation including removal of provisions of consent clause and social impact
assessment (SIA).
^ Top
Govt will invite pvt players to plan, build ITO infrastructure
Times of India,
July 23, 2015
A shortage of funds with the government for infrastructure development may usher in
the private sector in works like maintenance of roads, and construction of flyovers and
foot overbridges. The ITO decongestion plan is set to become the first project in which
the government will outsource planning and construction. The trend may pick up pace if
this project is perceived as successful.
The work at ITO involves construction of a foot overbridge and a skywalk. "ITO is a
prominent location and we also wanted to involve the public in the work of constructing
News
the FOB and skywalk. For that, we have started a competition for innovation designs that
are not only aesthetic but also fit in with the surroundings. It is open to everyone. Five
designs will be shortlisted for which winners will be paid Rs 50,000 each. Thereafter,
each will have to make a detailed presentation. The winner will be awarded Rs 2.5 lakh
after which the design copyright will be transferred to PWD. This is the same amount
that is paid to a consultant," said a senior PWD official.
The project will then be tendered out for construction and maintenance. Two to three
models of earning from the project are being considered. These include setting up of
kiosks, advertisements on the FOB and skywalk and even installation of small cellphone
towers on the structure. "There will be a concession period and a penalty clause as part
of the contract wherein the company will be penalized for not maintaining the structure.
The city is growing at breakneck speed and, if infrastructure has to keep pace, we will
need to involve private players. The government will closely monitor such projects," said
a source.
ITO, where the first such project will come up, witnesses a huge volume of both vehicular
and pedestrian traffic due to a heavy concentration of offices, a Metro station, the Tilak
Bridge railway station and seven major arterial roads. A new complex for the Supreme
Court and another court on Deen Dayal Upadhyay Marg will lead to increase in volume
of traffic. At present, there is only one footbridge in the area which is on Vikas Marg.
Delhi Metro has built a pedestrian subway.
PWD has, therefore, planned a skywalk connecting Sikandara Road to the parking lot
near Pragati Maidan Metro station across Mathura Road. The deck of this skywalk could
be linked to the proposed footbridge being constructed by DMRC near the Metro station.
The footbridge will connect the footpath of Deen Dayal Upadhyaya Marg to the lane near
the drain close to the Institution of Engineers building for access towards the Hans
Bhawan side from the Tilak Bridge railway station.
Stay updated on the go with Times of India News App. Click here to download it for your
device.
^ Top
Highways sector: Moving on the fast lane
The Indian Express,
July 23, 2015
Centre has awarded or almost finalised projects worth Rs 13,500 cr on BOT-toll basis in
April-June FY16 against `6,300 cr in FY15
The cost of the project is pegged at Rs 1,537 crore. IRB Infrastructure Developers, too,
will pay a premium of Rs 81 crore for developing the 124.5 km Agra-Etawah Bypass at a
cost of Rs 2,650 crore.
Early indicators point to a rather sharp rebound in investor interest in public-private
partnership (PPP) projects in the highways sector, with the government having managed
to either award or in advanced stages of finalising projects totalling about 1,000 km
worth around Rs 13,500 crore on a build, operate, transfer (BOT-Toll) basis in just the
first three months of the current financial year. This is in sharp contrast to the 734 km of
News
roads projects valued at Rs 6,300 crore that was awarded on this mode in the whole of
last financial year.
Given the response, the government is now aiming at awarding about 2,000 km of
highway development projects on public-private partnership basis out of its total target
of 10,000 km for the current financial year. The remaining projects are to be awarded on
engineering, procurement, construction (EPC) basis and under the newly conceived
hybrid annuity model.
A senior official in the Ministry of Road, Transport & Highways (MoRTH) said, “We have
seen that if we complete pre-construction activity prior to awarding a project, the
response is good from the private sector. We have already awarded two projects in the
first three months of this fiscal year; another six are in the pipeline. They have all
received strong and multiple bids.”
The fiscal, around eight-odd roads projects have received multiple bids from private
investors. Of these, two projects have been awarded at a premium to private developers.
The 109-km stretch between Solapur-Bijapur in Maharashtra has been awarded to
Uniquest Infra Venture Private Limited at a premium of Rs 6.80 crore.
The cost of the project is pegged at Rs 1,537 crore. IRB Infrastructure Developers, too,
will pay a premium of Rs 81 crore for developing the 124.5 km Agra-Etawah Bypass at a
cost of Rs 2,650 crore.
Besides these, the stretches for which the government has received interest from private
contractors on BOT-Toll basis include Shivpuri and Devas, Raipur and Bilaspur, Hospet
and Chitradurg, Reva and Jabalpur. All these projects have been stuck for at least the last
three years.
News
“We have taken several decisions in the last few months to enthuse private interest in
roads projects. Developers can now take out their entire equity in finished projects to
undertake new ones. The NHAI has been authorised to loan resources to developers
whose projects are stuck due to financial constraints,” added the official. For projects
awarded on BOT-Toll basis, the government has approved the exit policy which allows a
developer to move out of a project two years after the completion.
This has been done to free up the locked capital for further investment in the
infrastructure sector.
The industry has given a thumbs-up to the government’s initiatives. Hemant Kanoria,
CMD at Srei Infrastructure, said, “The government has shown all intentions to see things
moving. In fact the projects that were stuck because of clearances for few years now are
getting sorted and several of them have been cleared.” During the UPA regime, a total of
20,000 km of roads projects were awarded between 2010 and 2012. However, most of
the projects did not take off due to unavailability of land, delay in forest and statutory
clearances and economic slowdown.
When the NDA government came to power last year, work of stretches totalling 9000 km
was held up. Till now 39 projects covering 4,700 km have been cancelled or letters of
appointment for starting work have been withdrawn.
As many as 16 projects totaling around 1,360 km need fund infusion to start work. The
CCEA has now authorised the National Highways Authority of India (NHAI) to loan
resources from its corpus at a pre-determined rate of return to kickstart such projects,
stalled due to lack of additional equity or inability on part of the concessionaire to
disburse funds further.
“However, projects that are stuck for lack of ability of the developer to continue it or
complete it have yet to find a solution. While it has been proposed that such projects be
allowed to be taken over by new players, the government has not yet decided on it. Such
projects are important because they are large in numbers,” Kanoria added.
The NDA government has drawn up an ambitious target to award highway projects
worth Rs 3.5 lakh crore in the next six months. As many as 1,231 projects measuring
37,000 km have been firmed up for award by the ministry over the next two years.
One of the key projects is the Bharat Mala, which is aimed at developing 5,600 km of
new roads in border areas at an estimated cost of Rs 56,000 crore. Another 4,700 km of
roads to connect religious and tourism centres and to enhance connectivity in backward
areas is expected to come up at an estimated cost of Rs 44,000 crore. Besides this, worldclass highways will be developed to connect 100 of the 676 district headquarters in the
country.
The government has allocated Rs 42,913 crore for the highways sector in the budget for
the current fiscal, up from Rs 28,881 crore in 2014-15, to ensure greater participation in
road building in absence of private investment. But with such mega projects in the
pipeline, the government has also been exploring different terms of engagement to lure
in the private sector in investing in road infrastructure development projects.
^ Top
News
Fund crunch tests mettle of steel industry
Business Standard,
July 23, 2015
Make in India push has done little for the sector. Bellwether projects have been plagued
in the face of cheap imports & lack of captive raw material linkages
The government might have stepped up efforts to bail out steel projects stuck due to
paucity of funds, but as it emerges, high cost of funds is just a fraction of the problem
plaguing the sector.
More than 37 steel projects worth Rs 3,00,000 crore are stalled at the moment,
according to government data. The memoranda of understanding (MoU) for the mineralrich states of Jharkhand, Odisha and Chhattisgarh started pouring in from 2005. Some
of the biggest projects involve major players such as Tata Steel, Bhushan Steel, and JSW
Steel. Foreign players like Posco and ArcelorMittal too signed in.
News
But few projects have taken off since. Tata Steel's greenfield or new projects in
Jharkhand and Chhattisgarh are yet to take shape; Bhushan Steel is grappling with a
colossal debt, and JSW Steel is re-calibrating its Jharkhand and Bengal projects.
Recent reports suggest Posco could finally pack its bags after a frustrating decade-long
wait, in the wake of a change in law that makes auction of mines mandatory. The rules of
the game changed after the new mineral auction policy, according to the Mines and
Minerals (Development and Regulations) Amendment Act, 2015.
"Almost 90 per cent of the steel companies planned to set up plants thinking that the
state governments will award them captive mines. Now, they will have to bid for the
mines. Therefore, the project's viability has to be re-checked," an Odisha-based steel
producer said.
ArcelorMittal is making progress in its Karnataka and Jharkhand projects, but the pace
is slower than expected, the company recently told Business Standard.
While land and lack of captive raw material linkages have been the major contributors to
the stalling of these projects, the question looming large is whether it makes sense for the
companies to revive these projects at this point in time.
The government's Make in India push has done little for the sector. The capacity
utilisation in the 100 million tonne-domestic steel industry is at around 80 per cent, a
tad higher than the 75 per cent level that has been the operating level for the past four to
five years; cheap imports flooding the market have only added to the woes. Total flat
steel imports in 2014-15 increased 41 per cent to 4.5 million tonnes and in the first
quarter of the current financial year, it's already up 57 per cent to 1.55 million tonnes.
"The stalled projects have specific reasons, but two general issues dominate. One is low
demand visibility along with some over-capacity, not just in India but across much of the
globe. As a result, companies are delaying progressing their investments," Kameswara
Rao, leader (energy, utilities and mining), Price Waterhouse Coopers, said.
To set up a plant having capacity of one million tonne, the cost is Rs 7,000 crore. Add to
it, the interest cost, and it goes up to Rs 11,000 crore. The earnings before interest, taxes,
depreciation and amortisation (EBIDTA) on the other hand, would be just about half. "At
this rate, no one is willing to make fresh investment," a steel producer confided.
According to the Reserve Bank of India (RBI), five out of the top 10 private steel
producing companies are under severe stress on account of delayed implementation of
their projects due to land acquisition and environmental clearances, among other
factors. In its Financial Stability Report released on June 25, the RBI has detailed other
factors as well: Inadequate capital investment, shortage of iron ore, low-paced
mechanisation of mines, lower level of capacity utilisation of coal washeries, dependence
on imported coking coal (the quality of most of the domestic coking coal is not
considered good for steel production), and volatility in the currency market.
RBI, which has already warned of a possible spike in non-performing assets (NPAs) in
the steel sector, listed high port duty, lower import duty on stainless steel (dumping from
China and Brazil), deceleration in domestic demand, deceleration in exports due to
News
subdued demand coupled with depressed pricing in the global market and levy of an
anti-dumping duty of 50-55 per cent by the US on Indian SAW pipes as some other
factors dragging the sector.
"Assuming the land wrangle is resolved, what could bring back some certainty into the
sector is smooth iron ore supply and a halt in dumping from the Free Trade Agreement
(FTA) countries," JSW Steel director-commercial and marketing, Jayant Acharya,
explained.
Steel producers claim FTA countries account for around 50 per cent of imports. On an
average, the imported flat steel products is Rs 3,000 a tonne, less than the ruling
domestic price.
What could further compound problems is that an additional six million tonne capacity
has been commissioned by Steel Authority of India this year adding to the existing glut.
^ Top
Joint panel on Land Bill gets time till Aug 3 to submit report
The Hindu Business Line,
July 23, 2015
Amid the Opposition din over Lalitgate and Vyapam, the only work that was done in the
Lok Sabha on Wednesday was approving an extension till August 3 for submission of the
joint House panel report on the controversial land Bill.
The motion seeking extension of time was moved by SS Ahluwalia, head of the joint
panel, and was adopted by a voice vote.
The committee, which was mandated to submit its report on the first day of the Monsoon
session after seeking views of all stakeholders, sought time “up to the first day of the
third week of the current session of Parliament”. It wanted time to seek more views, it
had said earlier.
The panel had earlier written to the Speaker seeking an extension till July 27 to submit
its report. But on July 19, Ahluwalia sought time till August 3 to submit a report on the
Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and
Resettlement (Second Amendment) Bill, 2015.
If the joint panel does not submit the report during the Monsoon Session, the
government may have to re-promulgate the ordinance for the fourth time, as it has a life
span of six months to get Parliamentary endorsement.
Passage of the controversial Land Bill has become a challenge for the NDA government,
as the Opposition Congress is unwilling to ease its stance on it. Without Congress
support it will be difficult for the Bill to sail through in the Rajya Sabha, where the ruling
BJP is in a minority.
^ Top
News
‘GST rollout hit by rate band, exclusions’
The Hindu Business Line,
July 23, 2015
The Goods and Services Tax (GST) regime is facing challenges on three fronts, said
Parthasarathi Shome, former Chairman, Tax Administrative Reforms Commission.
These are tax evasion, States’ demand for a band of rates and exclusion of big-ticket
items such as petroleum, he said, speaking at a colloquium here on the ‘Role of taxation,
tax administration and GST’, organised by the Taxes Department, Kerala, in association
with Kinfra.
Bottomline question
“Perhaps it is worth trying the experiment for a year or two and then decide whether the
bottomline question is answered at all. “And that bottomline question is: have business
and investment decisions become more seamless than during the regime of VAT, Cenvat
and service tax?
“I will not say today without real experience that we will be worse off. I will not say that
we will definitely be better off. And therefore perhaps we are at a little bit of risk here.”
The GST implementation part should be simpler. Because there is no constraint on
improving it – be it the forms to be filled and refunds.
There is going to be an appropriate input tax credit for inter-State trade, which is called
IGST. This is a complex system of registering input tax paid in one State and transferred
to another.
Computerised system
A computerised system being maintained by the Centre is likely to take care of this. The
Centre will operate as a clearing house. A band of rates is not a good idea because then
businesses will have to deal with many rates. Maybe the States will converge on a few
rates. But there is no compulsion on them.
“We must require them to operate on a few rates. I hope policymakers will be able to
reduce and agree on a much reduced number of rates.”
Another challenge is that goods like petroleum are likely to be kept out of the tax base,
meaning that no input tax credit will be given.
“What it means basically is that the exporting State will keep the money to itself. It will
have a cascading effect and we will not move fully into a consumption-based tax system
since the revenue is not coming to the importing State.”
^ Top