Ist IPL Match in State Gets Nod, 19 in Limbo

The Economic Times - - Front Page - Rav­iTeja.Sharma@ times­group.com

New Delhi: In a re­prieve of sorts for the In­dian Premier League (IPL), the Bom­bay High Court has de­cided against stay­ing the first match of the IPL to be played in Mum­bai on April 9. It said that the In­dian cricket board and the state cricket as­so­ci­a­tion have made all ar­range­ments and the PIL against IPL matches in Ma­ha­rash­tra was filed very late. The PIL filed by NGO Lok­satta Move­ment chal­lenged the stag­ing of IPL matches in Mum­bai, Pune and Nag­pur at a time of se­vere drought and wa­ter scarcity in many parts of Ma­ha­rash­tra.

The first match of April 9 is be­tween home team Mum­bai In­di­ans and first timers Ris­ing Pune Su­per­giants, owned by busi­ness­man San­jiv Goenka.

The pe­ti­tioner claimed in the PIL that 60,000 litres of wa­ter was be­ing used per day to main­tain the ground and pitch at the three sta­di­ums when pro­hibitory or­ders are in place un­der sec­tion 144 in some ar­eas of the state like Latur to pre­vent ri­ot­ing over wa­ter. On Thurs­day, the court asked whether it was not the duty of the state to en­quire how the board is get­ting wa­ter dur­ing scarcity.

Ques­tion Hour

A fi­nance min­istry of­fi­cial con­firmed that pre­lim­i­nary dis­cus­sions around this pro­posal were held at a meet­ing on Thurs­day, but no de­ci­sion on its im­ple­men­ta­tion was taken. “The is­sue was dis­cussed. We are look­ing at all op­tions,” he said.

“The pro­posal en­tails that through a pro­vi­sion un­der In­comeTax Act, tax re­bate should be of­fered to all em­ploy­ees re­ceiv­ing ex­tra salary in­come through pay com­mis­sion in the year 2016-17 and 2017-18, pro­vided the money is in­vested in this Bank Re­cap­i­tal­i­sa­tion Scheme,” added the of­fi­cial.

The gov­ern­ment will have to ad­di­tion­ally shell out .₹ 40,000-50,000 crore an­nu­ally on ac­count of im­ple­men­ta­tion of the sev­enth pay com­mis­sion rec­om­men­da­tions with ef­fect from Jan­uary 1, 2016. If this pro­posal is ac­cepted, a por­tion of this money will be used to cap­i­talise banks. Ac­cord­ing to fi­nance min­istry es­ti­mates, staterun banks will re­quire .₹ 1.8 lakh crore of ad­di­tional cap­i­tal in the next four fi­nan­cial years, of which .₹ 70,000 crore will be pro­vided by the gov­ern­ment. The gov­ern­ment has bud­geted .₹ 25,000 crore for bank cap­i­tal­i­sa­tion in the cur­rent fis­cal.

While the gov­ern­ment has said it has made ad­e­quate pro­vi­sion in the Bud­get to cover the ex­tra spend­ing on ac­count of the pay com­mis­sion rec­om­men­da­tions, an­a­lysts reckon it is not ad­e­quate and full im­ple­men­ta­tion of award will make it dif­fi­cult to achieve the fis­cal deficit tar­get of 3.5% of GDP. “In­crease in gov­ern­ment em­ployee wages and pen­sion ex­pen­di­ture on ac­count of sev­enth pay com­mis­sion rec­om­men­da­tions is not fully pro­vided for in the Bud­get,” Mor­gan Stan­ley had said in a re­port.

The pro­posal cur­rently un­der con­sid­er­a­tion gives the gov­ern­ment the lee­way to meet both its pay com­mis­sion and bank cap­i­tal­i­sa­tion com­mit­ments with­out putting the fis­cal deficit tar­get un­der threat. Bonds will pro­vide the ex­che­quer some wrig­gle room. The pay­ment will be­come due when bonds ma­ture, leav­ing the gov­ern­ment with only the in­ter­est pay­ment li­a­bil­ity in the cur­rent fis­cal.

The flip side is that the pro­posed scheme could an­noy gov­ern­ment em­ploy­ees who are ex­pect­ing a greater take-home pay. Hence, the pro­posed scheme has a tax ex­emp­tion lol­lipop.

A sec­ond gov­ern­ment of­fi­cial said this amount will be used to re­cap­i­talise banks through a spe­cial bank cap­i­tal­i­sa­tion fund that will in­vest in per­pet­ual non-re­deemable pref­er­ence shares is­sued by banks. Banks will pay 5.1% div­i­dend that is also pro­posed to be ex­empted from the div­i­dend dis­tri­bu­tion tax. The fund will in turn pay 5% in­ter­est to gov­ern­ment em­ploy­ees, re­tain­ing 0.1% as ad­min­is­tra­tive charge.

“This in­ter­est in­come will also be tax free for gov­ern­ment em­ploy­ees,” he said, which will in­crease the ef­fec­tive yield.

The gov­ern­ment will even­tu­ally pay back the amount in four equal in­vest­ments af­ter eight, nine, ten and 11 years, thus spread­ing the fis­cal bur­den of re­pay­ment over that pe­riod. It will guar­an­tee pay­ment of 5% in­ter­est and re­pay­ment of de­posits, ir­re­spec­tive of whether the banks pay the div­i­dend or not, the of­fi­cial added.

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