Tag: union cabinet

Centre Planning to Provide 5-Year Tax Holiday to Pvt Development Finance Institutions

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The Centre is planning to make an amendment in the income tax act to provide for a tax holiday of five years to private DFIs when the Finance Bill is taken up for passage in Parliament.

According to an exclusive report by Economic Times, the move is being made to allow DFIs to build up a robust balance sheet.

Apart from a five-year holiday, DFIs will get tax benefits for 10 years.

The Union Cabinet on Tuesday approved a bill to set up a DFI to raise long-term capital to fund infrastructure development, as the government has envisaged an investment of Rs 111 lakh crore by 2025.

The proposed legislation will give effect to the Budget announcement made by Finance Minister Nirmala Sitharaman on February 1. The government has proposed Rs 20,000 crore to capitalise the institution.

“I am happy today the Cabinet has cleared this bill through which we will have an institution and institutional arrangement that will help in raising long-term finance. The budget provides for the initial amount. I had announced it in the budget, saying capital infusion from our side would be about Rs 20,000 crore,” Sitharaman told reporters after the Cabinet meeting.

The minister further said she expects the proposed institution to raise up to Rs three lakh crore in the next few years because it will have access to the market funds, which are otherwise not available.

During the pre-liberalised era, India had DFIs which were primarily engaged in the development of industry in the country. ICICI and IDBI, in their previous avatars, were DFIs. Even the country’s oldest financial institution IFCI Ltd acted as a DFI.

In India, the first DFI was operationalised in 1948 with the setting up of the Industrial Finance Corporation (IFCI). Subsequently, the Industrial Credit and Investment Corporation of India (ICICI) was set up with the backing of the World Bank in 1955.

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Centre to Shut Down Handicrafts & Handlooms Export Corporation, Offers Voluntary Retirement to 65 Employees

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The Union cabinet on Tuesday gave its nod to shut down loss-making Handicrafts and Handlooms Export Corp. of India Ltd (HHEC), and to offer voluntary retirement to all its 65 employees.

“There are 59 permanent employees and six management trainees serving in the corporation. All the permanent employees and management trainees will be given an opportunity to avail the benefit of a voluntary retirement scheme (VRS) according to the norms laid down by the Department of Public Enterprises (DPE),” the cabinet statement said.

The move is supposed to benefit the government exchequer in reducing recurring expenditure on salary/wages of the sick CPSE (central public sector enterprise), which is not in operation and earning no income. The export body is under the administrative control of the textiles ministry.

The corporation has been continuously incurring losses since 2015-16 and not earning sufficient income to meet its running expenses. “There is little scope for its revival, necessitating closure of the company,” the statement added.

As part of cost rationalisation drive in a pandemic year, the government has been readying recommendations to either shut or merge a number of its own departments and divisions.

According to a report by Moneycontrol last year, the Centre is preparing recommendations to merge Registrar of Newspaper with Press Council of India, India Brand Equity Foundation under Department for Promotion of Industry and Internal Trade into Invest India, and publication division under Information and Broadcasting ministry, into Bureau of outreach and Communication, among others.

The government is also planning to shut down almost a dozen autonomous bodies to rationalise costs. Some of the autonomous bodies that might be shut down are the National Productivity Council (NPC) and the Tariff Commission, among others, Moneycontrol had reported earlier.

The Union Textile Ministry in August abolished the All India Handicrafts Board and the All India Handloom Board — advisory bodies that were created to help the government in “formulation of the overall development programmes” in the handicrafts and handloom sectors, “keeping in view socio-economic cultural and artistic perspective.”

This was followed up with abolishing another advisory body – the Cotton Advisory Board. The government also notified that all eight Textiles Research Associations have ceased to be ”affiliated bodies” of the ministry.

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DFI in India: Cabinet clears proposal to set up development finance institution, says Nirmala Sitharaman | India Business News – Times of India

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NEW DELHI: The Union Cabinet on Tuesday approved the creation of a development financial institution (DFI) for financing infrastructure and development activities in the economy.
Briefing the media after the Cabinet meeting, finance minister Nirmala Sitharaman thanked Prime Minister Narendra Modi for his gentle nudge to set up the DFI as announced in Budget 2021.
“Past attempts to have alternative investment funds were taken up, but for various reasons, we ended up with no bank which could take up long-term risk (which is very high) and fund development,” she said.
The DFI will help raise long-term funds. It will have a professional board and at least 50 per cent of the members will be non-official directors.

The institution will be set up on a capital base of Rs 20,000 crore and will have lending target of Rs 5 lakh crore in three years.
Its initial grant will be Rs 5,000 crore and additional increments of grants will be made within the limit of Rs 5,000 crore.
“I expect the institution to raise up to Rs 3 lakh crore ($41.36 billion) in the next few years,” the minister added.
In her Union Budget for 2021-22 presented on February 1, Sitharaman had proposed to allocate Rs 20,000 crore for setting up a development finance institution, with a view to partly fund proposed $1.5 trillion in infrastructure projects over the next few years.
The DFI will initially start with a government ownership of 100 per cent and gradually with time it would come down to 26 per cent, but not below it, Sitharaman said.

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