Important News of the week

The government has decided to hike the prices of diesel by Rs. 5 and capped the limit of then number of unsubsidized LPG cylinders to 6 per household. This would push up the price in New Delhi to Rs. 47 per ltr for diesel and 750 per cylinder for LPG. It has also decreased the Excise duty on petrol by Rs. 5.30 but this benefit is not being passed on to the consumers. This decision has come after increasing demands for the same by the oil marketing companies whose under-recovery would be reduced by 20,300 crore.

Just after the outcry over the hike in fuel prices, the government has come up with another politically and socially controversial policy of allowing 51% FDI in multi brand retail, though 30% of its supplies have to be sourced from MSMEs. It has also allowed a 100% limit in single brand retail, 74% in broadcasting, 49% in Power Exchanges and 49% in domestic aviation. This slew of reforms has come after a long struggle for the government to balance between the demands of the industry and those of the people and the other political parties. And it is finally the industries which prevail.

After politically turbulent week where Mamata Banerjee withdrew support from the government, Finance Minister P. Chidambaram has come up with even more reforms, this time in the form of tax reliefs. After the partial non subsidization of LPG, import and excise duty on it have been waived. This has resulted in a 30-40 rupee decline in the prices. The withholding tax on foreign currency borrowings has also been lowered to 5% from 20% with a view of lowering the borrowing cost by up to 70 basis points.  The government has also allowed a deduction of up to Rs. 25,000 from taxable income for the first time investor into mutual funds and exchange trade funds, undaer the Rajiv Gandhi Equity Saving Scheme.