COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Cabinet increases Contingency Fund, restores budget cut

The Union cabinet today took a number of important decisions including raising the Contingency Fund from Rs 147 billion to Rs 324.9 billion and restoring the five per cent cut on the central plan budget.

The cabinet meeting, which was presided over by Prime Minister I K Gujral, also approved the proposal to recommend to the President promulgation of an ordinance raising the corpus of the fund to Rs 324.90 billion temporarily up to March 31. It also recommended an ordinance to enable the Kashmiri migrants to cast their votes by postal ballot, an official spokesman said in New Delhi.

By raising the Contingency Fund, the government has decided that the liabilities of the oil companies, which are to the tune of Rs 182 billion, will be cleared by the government.

The oil companies will be required to invest the money in special government bonds, the spokesman said.

Since the issue of bonds is crucial to the continuation of reforms in the oil sector and to the success of the planned disinvestment of the Indian Oil Corporation, it is necessary to sanction an advance of Rs 150.9 billion from the Contingency Fund of India to the ministry of petroleum and natural gas pending authorisation by Parliament.

It has also been decided that the fresh capital of Rs 27 billion be provided to three public sector banks to help them achieve the capital adequacy norms prescribed by the Reserve Bank of India. The official release said that all the requirements of additional funds are in the nature of accounting adjustments having no impact on the fiscal deficit..

On restoration of the five per cent cut on the central plan budget, the release said in view of resounding success of the Voluntary Disclosure of Income Scheme in mopping up Rs 105 billion, it was decided to restore the five per cent cut in the plan provisions.

The cabinet also approved the proposal of the Election Commission for adherence by members of council of ministers to the provisions of the model code of conduct for political parties.

The cabinet also approved the proposal of the ministry of finance for a convention between India and the Czech Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on the capital.

It gave the nod to the proposal for tourism agreement with South Africa. It cleared the home ministry proposal for signing of agreement on mutual legal assistance in criminal matters with France.

UNI