Ist IPL Match in State Gets Nod, 19 in Limbo
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.
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.