Cabinet discusses the integrated transport policy draft
New Delhi: During a recent meeting, the Union Cabinet discussed the revised draft
integrated transport policy threadbare and reiterated its stand on the controversial issue
of equity participation by foreign airlines in the domestic air transport sector. The
government assured that foreign equity participation in the airline industry for the
domestic sector would not be allowed. On the civil aviation sector, the draft policy has
also recommended increasing the share of airport revenue from non-aeronautical services
for making the airports viable, thereby generating surplus for further expansion and
development of airports. The revised draft also
recommended automatic indexation in passenger and freight fares to take care of increase
in fuel and wage costs. Besides, the task force was of the view that the Railways should
rationalise its fare structure in a phased manner to reduce the cross-subsidisation of
passenger traffic by freight traffic.
The recommendation to focus on creating rail hubs with
sufficient warehousing capacity for accelerating the program of containerisation was also
approved by the task force.
The draft policy has also prescribed the creation of an
independent rail tariff regulatory authority, besides recommending a proposal for reducing
the speed differentials between freight and passenger services as well as examining the
scope for separating the track management from rail operation.
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India may repay $1 billion of
World Bank loans
New Delhi: Buoyed by the turnaround in the external sector outlook, the Indian
government is poised to approve prepayment of about $1 billion in outstanding World Bank
loans.
The government is toying with two alternatives -- either utilise part of the burgeoning
foreign exchange reserves to retire the debt or alternately float fresh borrowings —
at considerably lower cost — through a nominated agency and thereby refinance the
borrowings. The proposal, which is being perceived as efficient treasury management, is
presently awaiting the approval of finance minister Yashwant Sinha.
This will be the second time that the government has taken recourse to the option of
prepaying outstanding debt from multilateral bodies. In 1993-94, the government had
prepaid $1.4 billion in loans owed to the International Monetary Fund. This was done as
there was a sharp turnaround in the external sector outlook and the Reserve Bank of India
was being forced to resort to sterilisation to mitigate the inflationary impact of huge
purchases of foreign exchange by the central bank.
It had also in the same period permitted private sector players to prepay past debts,
especially those raised around the crisis years of 1991 when interest rates were higher.
However, in the present context with foreign exchange reserves rising by nearly $1 billion
a month since January, it looks as though foreign currency reserves would touch $40
billion. Therefore, one view in government is to utilise these reserves to prepay some of
the outstanding debt.
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