2G scam...SC clarifies on Govt's presidential reference

The Supreme Court (SC) on Thursday said that public auction is not the only permissible option for allocation of natural resources and that its Feb. 2 verdict is limited to the allocation of mobile-phone permits. The Government should try to distribute all scarce natural resources with an aim to bring in more revenue, a five-judge panel headed by Chief Justice S.H. Kapadia said. "Profit maximisation cannot be only basis for allocating natural resources. The clarification from the apex court, however, has no bearing on the 2G order," the Bench said in its statement today. The Government had on April 12 moved the Presidential Reference signed by the then President Pratibha Patil in which eight questions were raised, including whether there could be judicial interference in policy matters, vis-a-vis disposal of natural resources and investments made by foreign investors under multi and bilateral agreements.

The reference had sought the apex court's opinion on whether the judgement is required to be given retrospective effect so as to unsettle the licences issued for 2G spectrum and allocated after 1994 till 2008. In February this year, the apex court had canceled 122 telecom licences granted in early 2008, saying that money power and the ability to manipulate the system helped bidders win new telecom licenses when A. Raja was the Telecom Minister. The Government made a presidential reference to the Supreme Court, seeking clarity on the universal applicability of the verdict. The Supreme Court clarified that its opinion doesn't have a bearing on its 2G order, which was only restricted to telecom spectrum. The five-judge bench said "which policy is best is the wisdom of the executive, since the judiciary doesn't have the expertise to decide which method is suitable for disposal of a particular natural resource." "Merely because there is scope for potential abuse of the process, the policy of auction can't be declared as the only route for disposal of natural resources," the judges added.  The Supreme Court's opinion today is not binding on the Government, or on other courts.

Govt expected to ask telcos to suspend 3G roaming pacts

Govt announces financial restructuring of Discoms

The Cabinet Committee on Economic Affairs on Monday approved the scheme for Financial Restructuring of State Distribution Companies (Discoms). The scheme contains various measures required to be taken by State Discoms and State Governments for achieving the financial turnaround of the Discoms by restructuring their debt with support through a transitional finance mechanism by the Central Government. The scheme is effective as soon as notified and will remain open upto 31st Dec 2012 unless extended by the GOI. Support under the scheme will be available for all participating State owned Discoms on fulfilling certain mandatory conditions as outlined in Part C of the Scheme.

The salient features of the scheme are as follows:

1. 50 percent of the outstanding short term liabilities upto March 31, 2012 to be taken over by State Governments. This shall be first converted into bonds to be issued by Discoms to participating lenders, duly backed by State Governments guarantee.
2. Takeover of liability by State Governments from Discoms in the next 2-5 years by way of special securities and repayment and interest payment to be done by State Governments till the date of takeover.
3. Restructuring the balance 50 percent Short Term Loan by rescheduling loans and providing moratorium on principal and the best possible terms for this restructuring to ensure viability of this effort.
4. The restructuring/reschedulement of loan is to be accompanied by concrete and measurable action by the Discoms/States to improve the operational performance of the distribution utilities.
5. For monitoring the progress of the turnaround plan, two committees at State and Central levels respectively are proposed to be formed.
6. Central Government will provide incentive by way of grant equal to the value of the additional energy saved by way of accelerated AT&C loss reduction beyond the loss trajectory specified under RAPDRP and capital reimbursement support of 25 percent of principal repayment by the State Governments on the liability taken over by the State Governments under the scheme.

The accumulated losses of the state power distribution companies (Discoms) are estimated to be about Rs. 1.9 Lakh crore as on 31st March, 2011. In order to look into the issues of State Discoms and to suggest a strategy for the turnaround of the distribution sector, Planning Commission constituted an Expert Group under the chairmanship of Sh. B K Chaturvedi, Member (Energy), Planning Commission. The approved scheme is formulated based on the report of the Expert Group and deliberations in the PMO and Ministry of Finance.

GoM recommends slashing prices of 348 "essentials drugs"

Prices of many "essentials drugs" such as ibuprofen, paracetamol and insulin injections are likely to fall as a ministerial panel has recommended price control for 274 more drugs. A Group of Ministers (GoM), led by Sharad Pawar, has proposed for 348 drugs, up from the present 74, to be brought under the National List of Essential Medicines (NLEM). The GoM on new drug pricing policy on Thursday recommended fixing the maximum retail price (MRP) of 348 essential medicines at the average price of all brands in a segment that has more than 1% market share by sales. While industry estimates the average price reduction at about 11%, the reduction on some medicines from many large companies, domestic and foreign, could be as high as up to 75%. The draft policy had proposed that price control be exercised on all 348 drugs with 614 dosages of each of the medicines as specified in the NLEM and other combinations of medicines mentioned in the list. However, according to industry experts and associations, the move will hurt Pharma companies by further squeezing their margins.

Govt sticks to H2 borrowing plan...Rules out extra debt sales

The Government has stuck to its FY13 market borrowing programme for the second half of the ongoing fiscal year and ruled out additional borrowings during the remainder of FY13. The Government on Thursday said that it would borrow Rs. 2 trillion in the second half of FY13, in line with the budget estimate. Economists are still skeptical that the Government will be able to meet its fiscal deficit forecast of 5.1% of GDP for FY13. Already, the Government's subsidy burden is running higher than budget estimates. Average borrowing via bonds sales will be Rs. 120-130bn per week between October and February. The Government is due to sell Rs. 150bn of bonds this week, taking its borrowings in the first six months of FY13 to Rs. 3.7 trillion. The rupee rose to a near five-month high on Friday while the benchmark 10-year bond yield fell as much as 5 basis points to 8.11%. The rupee rose to a high of 52.55, a level not seen since May 1. It was trading at 52.62 in recent trades versus the previous close of 53.01/02.

India's H2 borrowing schedule as budgeted: Nomura

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