Amendments to the Electricity Act, 2003





Amendments to the Electricity Act, 2003

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today approved the various amendments to the Electricity Act, 2003 as per the proposed Electricity (Amendment) Bill, 2014.


The amendments will usher in much needed further reforms in the power sector. The amendments will also promote competition, efficiency in operations and improvement in quality of supply of electricity in the country resulting in capacity addition and ultimate benefit to the consumers.

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Transfer of land for the implementation of Metro Rail Projects

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for transfer of land for the implementation of Metro Rail Projects.

The proposal is to restrict Ministries/Departments/PSUs of the Central Government from asking for land in exchange for land required for the implementation of Metro Rail Projects. The concerned Ministry/Department/ PSU would be compensated in monetary terms for the transferred land based on the rates as per prevailing guideline values. Once a Metro Rail project has been approved by the Cabinet, all Ministries/ Departments would give operating rights on the relevant land sought by the Metro Rail Company, immediately. This would be even during consultations between the concerned Ministries pending the actual transfer of the land, so that work of the project does not suffer.

Background

This decision will help in speedier implementation of Metro Rail Projects in the country and will avoid time and cost overruns and the consequent loss to the public exchequer. Rail-based `Mass Rapid Transit System` has been accepted the world over as a major solution for most traffic and environmental pollution related problems and also for being a catalyst for economic growth of cities.

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Amendments to the Insurance Laws (Amendment) Bill, 2008

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today approved the officials Amendments to the Insurance Laws (Amendment) Bill, 2008 and introduction in the Rajya Sabha when the Bill is taken up for consideration and passing.

The Bill is aimed at removing archaic and redundant provisions in the relevant legislations and to enable the insurance sector to work for the betterment of the insured with greater efficacy.

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Approval for Revised Project Cost and Extension of Contract for the Centralized Processing Center of the Income Tax Department at Bengaluru

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for extension of the contract for the Central Processing Centre (CPC) Project of the Income Tax Department at Bengaluru awarded to M/s Infosys Ltd by two years upto September 30th 2017. This would be after the end of the existing contract period on September 30th 2015 and for revision of the CPC project cost to Rs 1,078.59 crore.

This decision has significant benefits for the Department and taxpayers, including, better taxpayer services, savings in interest outgo, better recovery of outstanding tax payments, and freeing up departmental manpower for handling higher scrutiny and investigation work.

The decision will ensure horizontal equity by processing almost all returns filed by all categories of taxpayers across the country in a consistent, uniform, rule driven, identity blind manner. This will assure fairness in tax treatment to every taxpayer irrespective of their status.

By faster processing of returns and issue of refunds to the taxpayer’s bank account directly without any interface with the Department, by adhering to international best practices and standards (ISO certification) and by providing processing status updates and speedy communication using email, SMS and on the Department website, the decision will ensure transparency and accountability.

The proposal ensures the continuation of the Department`s goal towards business transformation through technology. The CPC has enabled end to end automation of all processes within the Department using various innovative methods to provide taxpayer services and to promote voluntary compliance.

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Amendments to the Lokpal and Lokayuktas Act, 2013 (1 of 2014) and the Delhi Special Police Establishment Act, 1946 (25 of 1946) and for introduction of a Bill in Parliament

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for amending the Lokpal and Lokayuktas Act, 2013 (1 of 2014) and the Delhi Special Police Establishment Act, 1946 (25 of 1946) and for introduction of a Bill in Parliament during the winter session of Parliament, on the lines of the Lokpal and Lokayuktas and other related law (Amendment) Bill, 2014 with such modifications or changes of drafting and consequential nature, if any, as may be considered necessary.

The proposed amendments will address some crucial deficiencies noticed in both the Acts as under:

a) as regards the composition of the Selection Committee for selection of the Chairperson and Members of Lokpal, by providing, inter alia, that when there is no Leader of Opposition In the House of the People, recognized as such, the expression "Leader of Opposition" shall include the "Leader of the Largest Party in Opposition of the Government" in the Lok Sabha;

b) for providing for qualifications for appointment of Director of Prosecution in the CBI and for his functional independence.

The proposed amendments will also address other deficiencies in the Lokpal and Lokayuktas Act, 2013

The Act, as now proposed to be amended, seeks to remove the deficiencies and provide for the alternative of Leader of Single Largest Opposition Party in the Lok Sabha in the event there is no Leader of Opposition in the Lok Sabha, for being represented on the Selection Committee for appointments of Chairperson and Members of. Lok Pal. The amendments will, inter alia, also ensure functional independence to the Director of Prosecution under the Delhi Special Police Establishment (DSPE) Act. The amendments seek to synchronize the provisions of the Lokpal and Lokayuktas Act with the existing regulating Acts, Rules and Regulations in respect of declaration of assets and liabilities by various categories of public servants and establish appropriate mechanisms to obtain and publish such information received from public servants, for the benefit of the public. The proposed amendments will, also ensure functional independence to the Director of Prosecution under the DSPE Act.

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Interest subvention to Public Sector Banks, Private Sector Banks, Cooperative Banks, RRBs, NABARD for providing short term crop loan to farmers

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval to the following:

1. To continue interest subvention to Public Sector Banks (PSBs), Private Sector Banks, Regional Rural Banks (RRBs), Cooperatives Banks and National Bank for Agriculture and Rural Development (NABARD) to enable them to provide short-term crop loans up to Rs.3 lakh to farmers at 7 per annum during the year 2014-15.

2. To provide additional interest subvention of 3 percent per annum to those farmers who repay on time, that is within one year of disbursement of their short-term crop loans taken during the year 2014-15.

3. To permit the release of Rs. 18,583 crore as interest subvention for 2014-15 of which Rs. 4399 crore subvention to NABARD for refinance to Cooperatives Banks and RRBs and Rs.14,184 crore to Public Sector Banks, Private Sector Banks, RRBs and Cooperative Banks for subvention on their own funds.

4. To provide interest subvention to small and marginal farmers having Kisan Credit Cards for loan against negotiable warehouse receipts for post harvest at 7 percent per annum. interest for a period of six months that is at the same rates as applicable for crop loans as given in the para (1) above.

5. To permit the release of Rs. 321 crore as interest subvention to small and marginal farmers having Kisan Credit Cards against negotiable warehouse receipts, for post-harvest.

6. To provide relief to farmers affected by natural calamities, the interest subvention of two percent will continue to be available to banks for the first year on the restructured amount. Such restructured loans may attract normal rate of interest from the second year onwards as per the policy laid down by the RBI.

Background

The Government of India has since 2006-07 been subsidizing short-term crop loans to farmers in order to ensure the availability of crop loans to farmers for loans upto Rs.three lakh at seven percent per annum. This interest subvention scheme has been further continued for 2014-15 for PSBs, Private Sector Banks, RRBs and Cooperative Banks. In the year 2009-10, an additional subvention of 1 percent was provided to farmers who repay their loans on time. This has been increased from 2 percent in 2010-11 to 3 percent in 2011-12, 2012-13 and 2013-14. Thus, the effective rate of interest for such prompt-payee farmers is four percent.

Banks have been consistently meeting the target set for agriculture credit flow in the past years. For the year 2014-15, the target for agricultural credit flow has been raised to Rs.8,00,000 crore from Rs. 7,00,000 crore in the year 2013-14.

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Capital requirement of Public Sector Banks - Raising capital from public markets by broad basing shareholding

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for allowing Public Sector Banks (PSBs) to raise capital to meet their additional capital requirements under BASEL-III by diluting Government holding upto 52 percent in a phased manner.

Out of 27 PSBs, Government of India controls 22 through majority holding. In the remaining 5 banks, SBI holds majority stake. These 27 PSBs control 70 percent of total branches, deposits and credit in the Indian banking system. Gol has regularly been infusing incremental capital in PSBs.

Basel-Ill capital adequacy norms will be fully phased in and applicable by 31.3.2019. Capital requirements of banks have increased under Basel-Ill.

As per Basel-Ill norms the minimum Tier-1 has to be 7 percent. In addition, Banks require another 2.5 percent of Common Equity as Capital Conservation Buffer. In all, Banks need a total of 9.5 percent. The quantum of capital support needed by banks is huge, which cannot be funded by budgetary support alone. The main concern of Gol primarily pertains to Common Equity Tier-I capital of 5.5 percent.

Going by past trends if we take average Gross Domestic Product (GDP) growth rate for the next five years as 6.5 percent and dividend pay-out ratio as 20 percent as percentage of net profit or 0.80 of risk weighted assets and credit growth rate at 18 percent and further RWAs growth at 16 percent, the total capital would be Rs.4,60,120 crore (Rs.2,39,720 crore Common Equity Tier-I) (Rs. 1,55,900 crore Additional Tier-I) and (Rs.64,500 crore Tier-II).

The total support provided to PSBs towards capitalisation during the last four years stands at Rs.5 8,634 crore. The provision for the current year is at Rs. 11,200 crore and the total market cap of Government shareholding as on 30.5.2014 stands at Rs.4,19,711 crore.

If the PSBs are permitted to bring down GOI holding to 52 percent in a phased manner, they can raise upto Rs.1,60,825 crore from the market. Gol budgetary support needed for 2015-19 would be Rs.78,895 crore only, which will maintain Gol holding at 52 percent. However, as Govt. is likely to receive an amount of Rs.34,500 crore from PSBs as dividend, the net outgo will only be Rs.44,395 crore.

While permitting banks to raise capital from the market, the banks would be advised to preserve the Government holding at minimum 52 percent and increase the public shareholding in a phased manner through the issue of shares largely to retail investors that is to common citizens of this country.

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Continuation, strengthening and establishment of Krishi Vigyan Kendras

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for the continuation, strengthening and establishment of Krishi Vigyan Kendras (KVKs) with an outlay of Rs.5739.56 crore. The scheme envisages continuation of 630 KVKs established till the XI Plan and establishment of 121 new KVKs in the XII Plan to carry out its wide range of activities so as to meet the technological needs of farmers.

This decision will have benefits such as assessment and demonstration of technologies and capacity development of farmers and extension personnel. KVKs will work as knowledge and resource centres of agricultural technology in the districts and produce critical quality technology products such as seed, planting material livestock strains, fingerlings and bio-products for availability to farmers.

The scheme includes initiation of new components that is ICT in agriculture, Farmer FIRST programme, creation of Farm Innovation Fund, Disaster Management Fund, Technology Information Units, mini seed processing facilities, micro nutrient analysis facilities, solar panels, vKVK and KVK net, specialized KVKs and e-farmers; and extending existing components like Integrated Farming System, rain water harvesting structures, soil and water testing laboratories, minimal processing facilities, carp hatcheries to new KVKs. The establishment of 16 new Agriculture Technology Information Centres (ATICs), Network Project on Expert System and New Extension Methodologies and Approaches by ZPDs are some other components. The scheme provides support to the Directorate of Extension (DEE) of State and Central Agricultural Universities.

The scheme also proposes to enhance the number of Zonal Project Directorates to 11 from the existing eight and creation of one Post of Zonal Project Director and one post of Principal Scientist in each of three new Zonal Project Directorates.

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Establishment of 6 (Six) new Debts Recovery Tribunals (DRTs) at Chandigarh, Bengaluru, Ernakulam, Dehradun, Siliguri and Hyderabad

Cabinet approved establishment of six new Debt Recovery Tribunals (DRTs) at Chandigarh, Bengaluru, Ernakulam, Dehradun, Siliguri and Hyderabad (4 DRTs at Bangaluru, Chandigarh, Ernakulam & Hyderabad are additional DRTs).

A study conducted through Indian Banks Association (IBA) in consultation with all stake holders, recommended rationalization of jurisdiction of some DRTs and setting up of six more DRTs. The number of cases pending with DRTs is over 50,000 and cases are increasing.

The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act) was enacted to provide for the establishment of Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs) for expeditious adjudication and recovery of debts due to banks and financial institutions. After the enactment of the SARFAESI Act 2002, DRTs have the Appellate jurisdiction under the said Act. The Finance Minister, in his Budget Speech on 10.7.2014 announced that six new DRTs would be set up.

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Creation of five posts of Additional Solicitors General of India in the High Courts of Punjab & Haryana, Patna, Jharkhand, Karnataka and Gujarat

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for creation of five posts of Additional Solicitors General, one each for the High Courts of Punjab & Haryana, Patna, Jharkhand, Karnataka and its Circuit Benches at Hubli-Dharwad & Gulbarga and Gujarat.

This decision will strengthen the litigation machinery to represent the Union of India (UOI) as a whole and specifically in the Punjab & Haryana High Court, Patna High Court, Jharkhand High Court at Ranchi, Karnataka High Court at Bangalore including its Circuit Benches and Gujarat High Court. This will also help in conduct of litigation on behalf of UOI efficiently and effectively.

The creation of these posts will also facilitate transaction of business in accordance with procedures and thus enable assigning of functions to legally trained persons. It will result in greater accountability of Government Departments to curb frivolous litigation and lessen the burden of Government cases in these Courts.

The proposal will also boost the morale of Government Department in following the rule of law and defending government policies and preventing high revenue pilferages.

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Establishment of Credit Guarantee Funds for Factoring

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval to establish a Credit Guarantee Fund for Factoring for MSME units.

The corpus of the Fund is Rs.500 crore. Assuming a leverage of 5 times of the corpus, gross factoring transactions would cover Rs.20,000 crore per annum at the end of fifth year. The corpus is estimated to be Rs.492 crore at the end of fifth year. In third year of operations, a mid-term review of the Fund may be undertaken and propose modifications if any.

The goal is to promote "factoring without recourse". The mechanism would be:

i. Governing structure - DoFS will be "the Settlor" and shall establish a Fund for guaranteeing factored debts. The Fund shall be under "National Credit Guarantee Trustee Company (NCGTC). It will have a Management Committee consisting of Secretary, DFS as the ex-officio Chairman. The convenor of the Management Committee will be nominated by the Settlor. The Management Committee shall be responsible for all policy aspects of the Fund.

ii. Coverage - Credit guarantee cover for a maximum of 50 percent of factored debt will be provided under the Fund. To start with, only transactions covered under the Factoring Regulation Act, 2011 are to be included.

iii. Guarantee Fee - The guarantee fee chargeable from the MLIs shall not exceed 0.75 percent per quarter of the guaranteed factored debts for the amount of guarantee cover.

iv. Filing of claims by factors - Claims shall be filed by MLIs with the proposed Fund, as per guidelines prescribed by the Management Committee.

v. Interest rate - The actual interest rate to be charged from the MSMEs will be left to Factors.

vi. Modifications to the parameters under the scheme - The key elements of the structure have been proposed based on very preliminary data in the sector. These may require to be revisited and will be done with the approval of FM.

Factoring is a financing arrangement for suppliers by making pre¬payments against invoices. This provides liquidity to MSMEs and facilitates collection of receivables. India`s factoring volume is below Rs.20,000 crore. The Factoring Regulation Act, 2012 provides the legal framework for factoring. RBI has issued guidelines. However, there is no insurance for factoring.

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Implementation of scheme for development of Solar Parks and Ultra Mega Solar Power Projects

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today approved the scheme for setting up 25 solar parks each with a capacity of 500 MW and above and Ultra Mega Solar Power Projects in various parts of the country where large chunks of land can be spared for this purpose.

These parks will be able to accommodate over 20,000 MW of solar power projects. The Solar Parks/ Ultra Mega Solar Power Projects will be set up during five years that is from 2014-15 to 2018-19 and will require Central Government financial support of Rs.4050 crore.  Smaller parks in Himalayan and other hilly States where contiguous land may be difficult to acquire in view of the difficult terrain, will also be considered.

The solar parks will be developed in collaboration with State Governments and their agencies. The choice of implementing agency for developing and maintaining the park is left to the State Government. The States, applying under the scheme, will have to designate an agency for the development of the solar park.

The State Government will first nominate the implementing agency for the solar park and also identify the land for the proposed solar park. It will then send a proposal to the Ministry of New and Renewable Energy (MNRE) for approval along with (or later) the name of the implementing agency. The implementing agency may be sanctioned a grant of upto Rs.25 Lakh for preparing a Detailed Project Report (DPR) of the Solar Park, conducting surveys, etc. The DPR must be prepared in 60 days.

Thereafter, application may be made by the implementing agency to SECI for the grant of up to Rs. 20 lakhs/MW or 30 percent of the project cost including Grid-connectivity cost, whichever is lower. The approved grant will be released by Solar Energy Corporation of India (SECI) as per milestones prescribed in the scheme.

All the States and Union Territories are eligible for benefitting under the scheme.  Solar parks will enable development of solar power in remote areas where land is inexpensive.

As the transmission system will be developed for the entire park, developers will not have to set up their own transmission lines. This will not only save money but will also avoid damaging the landscape of the area as only limited transmission lines would be laid.

Developers would be able to set up projects very fast as they will not have to get statutory and other clearances.  India will emerge as a major solar power producing country as nowhere in the world are solar parks being developed on such a large scale.



Background:



The Finance Minister, while presenting Budget for the year 2014-15, had amongst other things announced that the new and renewable energy deserves a very high priority and proposed to take up Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Laddakh in Jammu & Kashmir for which he had set aside a sum of Rs. 500 crore in the Budget.

The scheme for development of Solar Parks and Ultra Mega Soiar Power Projects has been conceived on the lines of the "Charanka Solar Park" in Gujarat which is a first-of-its-kind large scale Solar Park in India with contiguous developed land and transmission connectivity.



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Setting up over 300 MW of Grid-Connected Solar PV Power Projects by Defence Establishments under Ministry of Defence and Para Military Forces with viability gap funding under Phase-II/III of JNNSM

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for the following

i. Setting up over 300 MW of Grid-Connected and Off-Grid Solar PV Power Projects by Defence Establishments under Ministry of Defence and Para Military Force under Ministry of Home Affairs (MHA) with Viability Gap Fund (VGF) under the Jawaharlal Nehru National Solar Mission (JNNSM) in five years that is from 2014 to 2019;

ii. Stipulation of mandatory condition that all PV cells and modules used in the solar plants set up under this Scheme will be made in India;

iii. Provision of an amount of Rs.750 crore for Ministry of New and Renewable Energy (MNRE) from the National Clean Energy Fund (NCEF) for the purpose as recommended by the IMG; and

iv. Permission for right to use Defence land by the developers chosen by Defence Establishments by way of lease and otherwise or for self- use of the same by Defence Establishments themselves, for the purpose of setting up of Solar Power Projects and sale of excess power to distribution companies.

The Defence organisations/establishments will be free to own the power projects that is get an EPC contractor to build the project for them or get a developer who makes the investment and supplies power at a fixed tariff of Rs. 5.50 per unit.

Installation of solar power plants in Defence sector by utilising available land/rooftop will help in achieving energy security and promote ecologically sustainable growth. The use of domestically manufactured equipment shall boost indigenous production of solar cells and modules. Defence organisation will be able to get clean power at reasonable price for 25 years.
Amendments to the Electricity Act, 2003 Amendments to the Electricity Act, 2003 Reviewed by Ajit Kumar on 11:15 PM Rating: 5

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