ECONOMY AFFAIRS AUGUST 2011

ECONOMY AFFAIRS AUGUST 2011

• The Cabinet Committee on Economic Affairs on 30 August 2011 approved disinvestment of 5 per cent of government's stake in power equipment maker BHEL which is likely to fetch Rs. 4320 crore. After this disinvestment Government of India shareholding in the company would come down to 62.72%.
  
• A parliamentary Standing Committee on Finance headed by Yashwant Sinha in its recommendations on the Pension Fund Regulatory and Development Authority (PFRDA) Bill, 2011, recommended that subscribers to the New Pension System (NPS) should get an assured return on their investments. The committee also suggested imposing a 26 per cent cap on foreign direct investment (FDI) in pension programmes. The PFRDA Bill introduced in the Lok Sabha in March, 2011 includes no provisions pertaining to FDI. The committee suggested that the government should devise a mechanism so that subscribers of the NPS get guaranteed returns on their pension, so that they are not at any disadvantage via-a-vis other pensioners.
  
• India Post on 2 September 2011 signed a Memorandum of Understanding (MoU) with VFS Global to provide visa related services for different countries through post offices. The MoU set out broad understanding and intention of both the parties to provide visa related services at places where they are not currently available. Post Office counters will be used for fee collection, providing visa application forms, dissemination of visa information, biometric enrollment and other visa application process related services.VFS Global is in the business of visa application services and is currently working with 35 governments across the world.
  
• The report on Customer Service in Banks by a committee chaired by M. Damodaran, former Chairman of the Securities and Exchange Board of India (SEBI) was released. The Reserve Bank of India panel recommended an increased deposit insurance cover of Rs.5 lakh to encourage individuals to keep all their deposits in banks. The Damodaran panel mentioned that in case of sick banks, a possibility to enable customers immediately avail themselves of a part of their insured deposits before the final fate of sick banks is decided should be explored.
  
• The Cabinet Committee on Economic Affairs (CCEA) on 4 August 2011 approved equity infusion of Rs.1200 crore into the national carrier Air India that is passing through critical financial crunch. Air India had so far received financial assistance amounting to Rs 2000 crore in the last two financial years while its cumulative loss and debt burden is around Rs 67000 crore. The airline has a debt of Rs.4695 crore on an equity base of Rs.2145 crore.