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Cabinet approvals on November 20, 2019

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The Cabinet Committee on Economic Affairs (CCEA) Chaired by the Prime Minister Shri Narendra Modi has approved the following proposals on November 20, 2019.Cabinet DecisionEstablishment of the National Institute of Sowa Rigpa (NISR) at Leh:

CCEA has approved establishment of National Institute for Sowa-Rigpa (NISR) in Leh as an autonomous organization at an estimated cost of Rs 47.25 crore under the Ministry of AYUSH (Ministry of Ayurveda, Yoga & Naturopathy, Unani, Siddha, Sowa Rigpa and Homoeopathy).

Key Points:

i.A post of Director will be created to oversee the implementation and construction of the project. The institute was decided to be set up with the main focus of reviving the Sowa-Rigpa in the Indian Sub-continent.

ii.After setting up of NISR, cooperation among the existing Sowa Rigpa Institutions – Central University of Tibetan Studies (CIHTS). Sarnath, Varanasi (Uttar Pradesh) and Central Institute of Buddhist Studies, Leh, Union Territory of Ladakh. which are under the administrative control of Ministry of Culture and NISR will be established.

iii.Sowa Rigpa: Sowa Rigpa is a traditional medicine system practised in the Himalayan belt in India. The areas were the system is specially followed includes Sikkim, Arunachal Pradesh, Darjeeling (West Bengal), Himachal Pradesh, Union Territory of Ladakh.

Cabinet approves strategic disinvestment of CPSEs:

CCEA has given ‘In-principle’ approval for strategic disinvestment in 5 Central Public Sector Enterprises (CPSEs). The 5 CPSEs are as follows,

i.Bharat Petroleum Corporation Ltd. (BPCL),

  • The sale of stake in BPCL would exclude the company’s Numaligarh Refinery Ltd(NRL) in Assam. The 61% stake of BPCL in NRL will be moved to another govt. entity operating in the oil and natural gas sector.

ii.Shipping Corporation of India Ltd. (SCI)

iii.Container Corporation of India Ltd. (CONCOR)

iv.Tehri Hydro Development Corporation India Limited (THDCIL) and

v.North Eastern Electric Power Corporation Limited (NEEPCO)

Cabinet approves reduction govt’s equity shareholding in select CPSEs below 51%:

CCEA has approved to enable reduction of the govt of India’s shareholding that are below 51% in select.
Central Public Sector Enterprises (CPSEs). The management control will however be retained on case to case basis.

Key Points:

i.The approval will benefit in widening the bandwidth of disinvestment window in select CPSEs.

The free float available in the market will also have an impact on Foreign Portfolio Investments (FPI) in Indian capital markets.

National Capital Territory of Delhi (Recognition of Property Rights of Residents in Unauthorised Colonies) Bill, 2019 approved: 

CCEA gave its approval to introduce the National Capital Territory of Delhi (Recognition of Property Rights of Residents in Unauthorised Colonies) Bill, 2019 during the ongoing Winter Session of Parliament.

Bill purpose: The bill would help the residents of the unauthorised colonies of Delhi in registering properties and also to provide relief to residents from registration charges and stamp duty.

i.Nearly 40 lakh residents in Delhi live in unauthorized colonies located on private or public land. It was necessitated to recognize and confer rights of ownership or transfer or mortgage to the residents of such colonies on the basis of Power of Attorney, -Agreement to Sale, Will, Possession Letter and other documents.

Patent Prosecution Highway programme Approved:

CCEA approved for the adoption of Patent Prosecution Highway (PPH) programme by the Indian Patent Office (IPO). the IPO is under the Controller General of Patents, Designs & TradeMarks, India (CGPDTM) with patent offices of various other interest countries or regions.

PPH programme: The programme will be started between Japan Patent Office(JPO) and IPO on a pilot basis for 3 years.

  • Programe coverage: Under the programme, IPO will receive patent applications in certain specified technical fields. These fields include electrical, electronics, computer science, Information Technology(IT), physics, civil, mechanical, textiles, automobiles and metallurgy.
  • JPO will receive patent applications in all fields of technology.
  • The programme would reduce the time to dispose patent applications, reduce pendency of patent applications and improve the quality of search and examination of patent applications.

Ex post facto on the proposal that has been approved under Rule 12 of the Government of India (Transaction of Business) Rules, 1961 approved: 

CCEA approved the ex post facto the orders issued by the President of India under Rule 12 of the Government of India (Transaction of Business) Rules, 1961 for issuance of order under Section 73 of the Jammu and Kashmir Reorganisation Act, 2019 along with order under Section 74 of the said Act.

Reason for approval:

i.The former state of Jammu and Kashmir was reorganised to new Union Territory of Jammu and Kashmir and the new Union Territory(UT) of Ladakh on 31st October, 2019 under article 370 of the Indian constitution.

ii.As Article 356 of the Constitution of India is not applicable to the Union territories, the President’s Rule was revoked on 31st October, 2019 which was previously imposed in the erstwhile state of J&K in December 19, 2018.

iii.In order to avoid any constitutional vacuum, based on the report of the Governor of erstwhile State of Jammu and Kashmir, a Presidential order was issued on 31st October, 2019 under Section 73 of the J&K Reorganisation Act, 2019 imposing President’s rule in the UT of Jammu and Kashmir.

iv.An order was also issued by the President in order to authorize expenditure out of the Consolidated fund of UTof J&K under section 74 of the Jammu and Kashmir Reorganisation Act, 2019 on 31st October, 2019.

v.In 1974, there were 14 districts in J&K. By 2019, various State governments of Jammu and Kashmir reorganized the areas of these 14 districts into 28 districts.

Extension/renewal of the extant Pharmaceuticals Purchase Policy (PPP) approved:

The CCEA has approved extension of Pharmaceuticals Purchase Policy (PPP) pharmaceutical Central Public Sector Undertakings (CPSUs) till their closure/strategic disinvestment.

  • 1 additional product i.e., Alcoholic Hand Disinfectant (AHD) is added with the PPP extension/renewal. The AHD is added to the existing list of 100 medicines till the CPSUs closure/disinvestment.

Key Points:

i.Benefit of the extension: The extension will help the existing facilities to have optimum utilisation of their resources and to generate revenues to pay the employees.

ii.PPP: The PPP was approved in 2013 for a 5-year period. The policy is applicable to Central/ State Government departments and their Public Sector Undertakings etc. The pricing is decided by the National Pharmaceutical Pricing Authority (NPPA). The term of the policy expires in 2018.

About Union Cabinet:

The Union cabinet exercises the executive authority in India. The senior minister in the cabinet are called as cabinet ministers, junior minister as minister of state and rarely deputy ministers. The cabinet is led by the Prime Minister.

Taxation Laws (Amendment) Bill, 2019 approved:

The CCEA has approved the proposal for introducing the Taxation Laws (Amendment) Bill, 2019 in order to replace the Ordinance.

Taxation Laws (Amendment) Bill, 2019: Additional fiscal stimulus was needed to attract investment in corporate companies as it was over necessitated by many countries of the world after Finance (No. 2) Act, 2019 (Finance Act) was enacted along with the reduction of corporate tax rate cut. This was done through promulgation of The Taxation Laws (Amendment) Ordinance 2019 (the Ordinance) in September, 2019.

Amendment features: Some of the features of the amendment are as follows,

  • New provision was inserted in the Income Tax(IT) Act 1961, with effect from FY20(Financial Year 20). The provision is that a company may opt to pay tax at 22% plus surcharge at 10% and cess(tax) at 4% if it doesn’t claim incentive/deduction.
  • Tax rate cut for these companies comes to 25.17% and would also not be subjected to Minimum Alternate Tax (MAT).
  • As a way of providing relief to listed companies, the buy-back tax on shares of listed companies introduced through the Finance Act 2019, will not apply to buy-backs in respect of which public announcements were made before 5th July, 2019. Click here to know more about other features of the law.

Enactment of Recycling of Ships Bill, 2019 and accession to the Hong Kong International Convention for the safe and environmentally sound recycling of ships, 2009 approved: 

The CCEA has approved the proposal for enactment of the Recycling of Ships Bill, 2019 and accession to the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009. Under the Recycling of Ships Bill 2019, the govt. will provide regulations of recycling of ships by setting international standards. A statutory mechanism for enforcement of the standard will also be set up.

The cabinet decided to accede (agree to a demand, request, or treaty) to the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009. When the convention comes to force, it will be implemented under the Recycling of Ships Bill, 2019.

Bill features:

i.The bill prohibits the use or installation of hazardous materials in the ship irrespective of whether the ship will be recycled or not.

  • Existing ships will be given 5-year compliance to remove the hazardous material.
  • New Ships will be prohibited to use the hazardous material with immediate effect from the date of legislation comes to force.
  • Warships and other non-commercial ships will not be given restriction on usage of the hazardous material.

ii.Survey: The ships will be surveyed & certified based on the inventory of hazardous material used.

iii.Recycling: ships will be recycled only on authorized ship recycling facilities. Ships to be recycled in India should possess “Ready for Recycling Certificate” in accordance with the HKC (Hong Kong Convention).

iv.Ship recycling statistics on India: India has 30% share of recycling industry globally. As of 2017 according to the UNCTAD (United Nations Conference on Trade and Development) report on the Review of Maritime Transport, 2018, India had demolished 6,323 tonnes of known ship scrapping across the world.

v.HKC: The HKC is aimed at ensuring that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risks to human health, safety and the environment.

Approval of the introduction of International Financial Services Centres Authority Bill, 2019 in Lok Sabha, after withdrawal from Rajya Sabha:

The CCEA has approved for withdrawing of the International Financial Services Centres Authority, 2019 Bill which was introduced in the Rajya Sabha on 12th February, 2019. It is pending in the Rajya Sabha and will be introduced by the lok sabha in the ensuing session of the parliament.

Need for the bill: The banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators i.e. the Reserve Bank of India(RBI), Security Exchange Board of India(SEBI) and IRDAI (Insurance Regulatory and Development Authority of India). Due to IFSCs dynamic nature of business, higher degree unified regulator for IFSC was needed. Thus International Financial Services Centers Authority, 2019 Bill has been formed.

  • The Lok Sabha Secretariat has now conveyed that this is a Finance Bill under Article 117(1) of the Constitution and that it should be introduced in Lok Sabha accordingly with the recommendation of the President under Article 117(1) and 274(1) of the Constitution.

Industrial Relations Code Bill, 2019 approved:

CCEA has given its approval for the introduction of the Industrial Relations Code bill, 2019 in the Parliament.

i.Industrial Relations Code Bill, 2019: The bill allows to hire workers on fixed-term contract of any duration. Threshold on the worker count of 100 for prior govt. approval has been retained. Yet, there is also provision of changing the no. of employees from 100 to any other count through notification.

  • Fixed term contract: The fixed term contract here denotes, 3 months or 6 months or 1 year depending on the season and order.

ii.As per the bill, 2-member tribunal will be set up instead of 1, to deal with important cases jointly and rest by a single member for speedy disposal of cases.

The draft code on Industrial Relations was prepared after amalgamating, simplifying and rationalizing the relevant provisions of following three Central Labour Acts. They are,

  • The Trade Unions Act, 1926.
  • The Industrial Employment (Standing Orders) Act, 1946 and
  • The Industrial Disputes Act, 1947.

Cabinet approves initiatives to revive the Construction Sector:

CCEA chaired approved to implement certain initiatives to revive the construction sector.
Proposals: The approvals include,

  • Government Entities’s decision to initiate proceedings for setting aside the arbitral award, and any appeal(s) thereto, with the opinion of a Law Office for India / the Additional Solicitor-General for India, in consultation with the Department of Legal Affairs.
  • 75% of the amount of the arbitral award will be paid by the govt entity to the contractor/concessionaire against bank guarantee when the govt challenges an arbitral award. An arbitral award is a determination on the merits by an arbitration tribunal in an arbitration, and is analogous to a judgment in a court of law.
  • Govt entities to which the order will be applicable include all public sector undertakings(PSU), autonomous organisations, Special Purpose Vehicles (SPV) with 50% or more paid up share capital held by the central govt. and central govt. held departments.

Amendments and modifications in the Toll-Operate-Transfer model and securitization of user fee receipts of NH approved:

CCEA approved the amendments proposed in the Toll Operate Transfer (TOT) Model by National Highways Authority of India (NHAI).

i.TOT model: Under the model, public funded operational National Highway(NH) projects having toll revenue generation history of 1 year after Commercial Operations Date (COD) will be monetised through the TOT model. The TOT model provides for a fixed 30-year concession period.

  • The monetisation under the model will be subject to approval of the Competent Authority in the Ministry of Road Transport and Highways (MoRTH) / NHAI on a case to case basis.

ii.A total of 75 operational NH projects have been identified using the TOT model.

iii.Purpose of TOT model: The TOT model will allow the NHAI to

  • Manage NH projects efficiently through Operation and Maintenance (O&M).
  • Arrange for additional funds to achieve targets underBharatmala programme (centrally-sponsored and funded Road and Highways project of the Government of India.)

Proposal for reducing financial stress being faced by the Telecom Services Sector approved: 

CCEA approved to reduce the financial stress currently faced by the telecom service sector. As per the proposal,

  •  Department of Telecommunication(DoT) will be given the option for the Telecom Service Providers (TSPs) to defer the payments of the spectrum auction instalments due for 2020-21 & 2021-22 either for 1 or both years.

Key Points:

i.Benefit: The approval will enhance ease of cash outflow in the stressed TSPs and provide statutory liabilities payments and interest on bank loans.

ii.The amendments to the license will be issued with the approval of the Minister of Communications Shri Ravi Shankar Prasad.