Govt working to make subsidies transparent

The finance ministry today informed Parliament that the government was evolving a policy on targeting subsidies, mainly explicit subsidies on food, fertiliser and petroleum after discussions with stakeholders.

S S Palanimanickam, minister of state for finance, in reply to a question in the Rajya Sabha, said the government was making efforts to ensure that benefits of subsidies were maximised by making them transparent, well designed and targeted.

He said many reviews and evaluation studies had pointed out that even in the case of food subsidies, benefits had accrued to non-needy sections, apart from illegal diversion of food grain to the market.

The government has not quantified the extra expenditure on account of such diversion as much of these were clandestine activities and any estimate would be subjective, he said.

The government has already submitted a report on subsidies to Parliament which was discussed in a meeting of the consultative committee of the ministry of finance on February 8, 2005, he said.

No tax on FIIs
In a written reply, Palanimanickam said the government was not considering imposing a tax on foreign institutional investors (FIIs) to curb volatility in the stock markets.

Disinvestment
He also said that no specific decision had been taken on disinvestment in Navratna company Bhel and other public sector companies for the current fiscal.

The current policy of the government envisaged that the existing Navratna companies will be retained in the public sector and profit making companies would not be generally privatised, he said.

Tax on senior citizens
The minister said the government had received representations that the tax structure proposed in the Finance Bill, 2005 had adversely affected the interests of senior citizens and pensioners. He added that the government's response would be reflected in its amendments to the Finance Bill.

Defaulters
Top 10 defaulters, including Daewoo Motors and Malvika Steel Ltd, owe scheduled commercial banks Rs 3908.96 crore, Finance Minister p chidambaram said in the Rajya Sabha today.

"As on March 19, 2004, a total amount of Rs 2,47,210 crore of scheduled commercial banks is outstanding against big and medium industry. Top 10 defaulting companies owe about Rs 3900 crore to various banks," he said.

Daewoo Motors India Ltd owes Rs 373.63 crore while Malvika Steel Ltd owes Rs 1037.59 crore.

Other big defaulters include mardia chemicals ltd (rs 561.05 crore), lloyds steel industries ltd (rs 307.42 crore), mardia steels ltd (rs 284.58 crore), indian charge chrome ltd (rs 284.20 crore), shrishma fine chemical and pharmaceuticals ltd (rs 275.43 crore), altos india ltd (rs 263.93 crore), jct electronics ltd (rs 261.95 crore) and lloyd steel industries ltd (rs 259.18 crore).

"Banks made concerted efforts to recover overdues. In this regard, government of india and reserve bank of india have also stipulated certain steps for recovery of loans, including arrears which inter-alia include evolving and implementing a recovery policy by banks, filing of suits in civil courts/drts, compromise settlement and monitoring and follow up of npas at various levels," he said.

A credit information bureau has been set up to disseminate inforamtion on borrowers among the banks.

Corporate debt restructuring (cdr) scheme has been put in place to provide a transparent mechanism for restructuring of corporate debts of viable entities facing problems due to international and external factors.

Besides, asset reconstruction co has been incorporated for the purpose of addressing non-performing assets, he said.

ECB
In response to another question, he said the Budget had allowed qualified NGOs engaged in micro-finance to access the external commercial borrowing (ECB) window.

ECBs can be raised for investment (such as import of capital goods, new projects, modernisation/expansion of existing production units) in the real estate sector, that is, industrial sector including small and medium enterprises (SME) and infrastructure sector.

Utilisation of ECB proceeds is, however, not permitted for on-lending, investment in capital market and in real estate by corporates except development of integrated township as defined by the ministry of commerce and industry.