Finally, Govt hikes diesel prices...LPG subsidy capped
The Cabinet Committee on Political Affairs (CCPA) met on 13th September, under the chairmanship of the Prime Minister to consider the disturbing situation arising out of projected massive under-recoveries of Rs. 1,87,127 crore for the financial year 2012-13 in the wake of high international crude oil prices and sharp depreciation of Indian Rupee against US Dollar. The uncompensated under-recovery causes loss tothe Public Sector Oil Marketing Companies (OMCs).
The CCPA took the following decisions to be implemented with effect from the midnight of 13/14 September 2012 :
- Increase in price of Diesel by Rs. 5 per litre excluding VAT. Out of this, Rs. 1.50 per litre is on account of increase in Excise Duty. The balance increase of Rs. 3.50 per litre will reduce the under-recovery of OMCs by about Rs. 15,000 crore for the remaining part of the current financial year.The under-recovery on sale of Diesel during 2012-13, even after this price hike,is estimated to beaboveRs. 1,03,000 crore. The revised RSP of Diesel in Delhi will be approximately Rs. 47 per litre. Further, branded Diesel will be sold at the market rate.
- No increase in the price of Petrol, although the current under-recovery on Petrol is about Rs. 6 per litre. The consequent loss to the OMCs will be offset through reduction in Excise Duty on Petrol by Rs. 5.30 per litre.
- Restrict the supply of subsidized LPG cylinders to each consumer to6cylinders (of 14.2 Kg) per annum. This will help in reducing the under-recovery by about Rs. 5,300 crore for the remaining part of the financial year. The under-recovery on sale of Domestic LPG during 2012-13, even after this measure, is estimated to be above Rs. 32,000 crore. Any number of cylinders will be available over and above the cap of 6 cylinders at market rate. The number of subsidized LPG cylinders available to each consumer in the remaining part of the current financial year will be 3 cylinders.While subsidized cylinders will continue to be available at Rs. 399 per cylinder (at Delhi), the market rate of LPG cylinders at non subsidized rates will be notified by the OMCs on monthly basis.
- No increase in the price of PDS Kerosenewhich is currentlyRs. 14.83 per litre (at Delhi). The under-recovery of the OMCs on sale of Kerosene during 2012-13 will continue to be about Rs. 32,000 crore...Read More
Fuel price hike...Impact analysis
Govt hikes diesel by Rs.5; Opposition, allies voice dissent
Coal Ministry de-allocates four coal blocks
The Coal Ministry has decided to de-allocate four captive blocks and plans to deduct the bank guarantees of three mines and deposit the bank guarantee of another block, reports said. The blocks that have been de-allocated are one Bramdih allocated in 1999 to Castron Minning, two blocks - Chinora and Warora - allocated in 2003 to Field Mining & Ispat Ltd and a block, Lalgarh North, allocated in 2005 to Domco Smokeless Fuels. Reports said citing sources that these companies have not set up their end-use plants and some of them have also not got their mining plans approved. Also, Monnet Ispat & Energy has been asked to deposit its bank guarantee of around Rs. 900mn pertaining to coal block Utkal B2. "Since, it has slipped some milestone and if it does not start production by March 2013, the bank guarantee would be forfeited," reports said citing sources.
Govt suspends clearance to 93 iron ore mines in Goa
Goa suspends all mining activities temporarily
Goa has temporarily suspended all mining activities, effective from Tuesday, after an expert panel formed by the central government found "serious illegalities and irregularities" in mining operations, according to reports. Reports stated that Goa has not banned movement of iron ore already produced and stored at ports or in transit. The state will form a verification and clearance committee to scrutinize operations before giving approval to resume mining, R K Verma, principal secretary at mines and geology, reportedly said. Goa produces more than 50 million tonnes of iron ore annually and exports almost all of it, making it the top exporter.
Sesa Goa to temporarily stop mining operation in Goa
Fed unveils QE3...To buy US$40bn agency MBS per month
The Federal Open Market Committee (FOMC) on Thursday agreed to increase policy accommodation by purchasing additional agency mortgage-backed securities (MBS) at a pace of US$40 billion per month. Fed policymakers will also continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June. The FOMC said it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. "These actions, which together will increase the Committee’s holdings of longer-term securities by about US$85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative," the FOMC said in a statement. The FOMC also said that it will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the FOMC will continue its purchases of agency MBS, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the FOMC will, as always, take appropriate account of the likely efficacy and costs of such purchases. To support continued progress toward maximum employment and price stability, the Fed policymakers expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.
In particular, the FOMC also decided to keep the target range for the federal funds rate at 0 to 0.25% and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. Economic activity has continued to expand at a moderate pace in recent months, the FOMC said in its assessment of the world's largest economy. Growth in employment has been slow, and the unemployment rate remains elevated, it added. "Household spending has continued to advance, but growth in business fixed investment appears to have slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level," the FOMC said. Inflation has been subdued, although the prices of some key commodities have increased recently, the Fed's policy-setting panel said. Longer-term inflation expectations have remained stable. The FOMC said it seeks to foster maximum employment and price stability. The Fed is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The FOMC said it also anticipates that inflation over the medium term likely would run at or below its 2% objective.
Read full FOMC statement on QE3
Highlights of Ben S. Bernanke's press conference
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