POSTAL BILL LIKELY TO BE PLACED FOR ADOPTION IN PARLIAMENT
========================================New Delhi: A new regulator on the cards for India Post and private courier firms would fix the tariffs for their services. The government has comprehensively re-drafted an earlier Bill on postal regulation with a view to bringing the entire communication industry under a regulatory regime similar to the one for the telecom sector.
As per the re-drafted Bill —the Post Office and Courier Services Bill, 2010—which was reviewed by FE, the courier firms would need to register themselves with the regulator—Postal Regulatory Authority of India (PRAI)— and adhere to a set of guidelines for quality of services framed by it. The firms will also have to contribute to a Universal Service Obligation Fund (USOF) to enable delivery of postal services to financially unviable areas at affordable rates.
However, the government has dropped the controversial provision in the original (2006) draft of the Bill which sought to bar private courier firms from carrying packets weighing below 500 gm. Also, in a departure from the original draft, which specified the fee structure for the players, the new Bill has left such matters for the regulator to decide.
The size of the Indian courier industry is over Rs 4,000 crore with major players being DHL, FedEx India and DTDC.
As per the latest proposal, PRAI will have functions similar to that of telecom regulator TRAI. It can suo motto recommend to the government policy measures on the entire gamut of the postal sector. On its part, the government can seek its recommendations on issues of importance.
Once PRAI is constituted, all existing courier firms would have to register themselves with it for a 10-year period on payment of a fee. The registration, of course, can be renewed once it expires.
The regulator would set eligibility criteria for those wanting to enter the sector in the new regulated regime. It would have powers to recommend to the government revocation of licences of any firm which fails to meet the criteria set out by it.
The government (read the department of post and a reinforced Postal Board) would retain the powers to make policies and provide licences.
A Postal Dispute Settlement and Appellate Tribunal would be set up to arbitrate on disputes between the industry and the regulator, the regulator and the government, industry and the government; and between industry players.
Financial Express 26.07.2010
As per the re-drafted Bill —the Post Office and Courier Services Bill, 2010—which was reviewed by FE, the courier firms would need to register themselves with the regulator—Postal Regulatory Authority of India (PRAI)— and adhere to a set of guidelines for quality of services framed by it. The firms will also have to contribute to a Universal Service Obligation Fund (USOF) to enable delivery of postal services to financially unviable areas at affordable rates.
However, the government has dropped the controversial provision in the original (2006) draft of the Bill which sought to bar private courier firms from carrying packets weighing below 500 gm. Also, in a departure from the original draft, which specified the fee structure for the players, the new Bill has left such matters for the regulator to decide.
The size of the Indian courier industry is over Rs 4,000 crore with major players being DHL, FedEx India and DTDC.
As per the latest proposal, PRAI will have functions similar to that of telecom regulator TRAI. It can suo motto recommend to the government policy measures on the entire gamut of the postal sector. On its part, the government can seek its recommendations on issues of importance.
Once PRAI is constituted, all existing courier firms would have to register themselves with it for a 10-year period on payment of a fee. The registration, of course, can be renewed once it expires.
The regulator would set eligibility criteria for those wanting to enter the sector in the new regulated regime. It would have powers to recommend to the government revocation of licences of any firm which fails to meet the criteria set out by it.
The government (read the department of post and a reinforced Postal Board) would retain the powers to make policies and provide licences.
A Postal Dispute Settlement and Appellate Tribunal would be set up to arbitrate on disputes between the industry and the regulator, the regulator and the government, industry and the government; and between industry players.
Financial Express 26.07.2010
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Small Savings Interest may reduce - Government considereing to link with prevailing market rate.
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The government is considering to deregulate interest rates on small savings schemes like public provident fund (PPF) and post office deposits, linking them to the prevailing interest rates in the markets.
The move will reduce returns on such schemes. At present, the interest rates on small savings schemes are fixed by the government, which are normally higher than the prevailing interest rates in the market. For example, the interest rate on PPF is 8%, which is tax-free, while that on the other similar instruments like bank deposits are lower.
The post-tax return on bank deposits is around 5.5% for those who fall in the highest tax bracket of 30%.
Towards this end, the government has set up a committee under the Reserve Bank of India deputy governor Shyamla Gopinath — to suggest the ways and means — for deregulating interest rates on small savings schemes. Small savings schemes mobilise huge amount of funds as they offer higher interest rates.
According to the Budget estimate, in 2010-11, these schemes may fetch Rs 50,300 crore, taking the total mobilisation to Rs 7,57,000 crore.
Funds mobilised under small savings schemes are disbursed to the central and state governments as debt. As the cost of the small savings funds are high, state governments pay higher interest rates (9.5%-10%) on the loans taken from these schemes compared to other sources in the market.
The 13th Finance Commission headed by former finance secretary Vijay Kelkar had suggested to bring down the interest rates on outstanding loans to 9% by the end of 2009-10.
But for this, the interest rates on small savings should also be brought down.
At the same time, according to the Fiscal Responsibility and Budget Management (FRBM) Act, states cannot borrow from open market beyond 4% of their fiscal deficits. Therefore, states are not able to benefit from prevailing lower interest rates in the market and take higher-interest loans from small savings.
The committee will also examine the new investment opportunities for the funds mobilized under small savings schemes. At present, the funds could be invested only in the central and state governments special securities. Committee will also review the administrative arrangement including the cost of operation.
The government is considering to deregulate interest rates on small savings schemes like public provident fund (PPF) and post office deposits, linking them to the prevailing interest rates in the markets.
The move will reduce returns on such schemes. At present, the interest rates on small savings schemes are fixed by the government, which are normally higher than the prevailing interest rates in the market. For example, the interest rate on PPF is 8%, which is tax-free, while that on the other similar instruments like bank deposits are lower.
The post-tax return on bank deposits is around 5.5% for those who fall in the highest tax bracket of 30%.
Towards this end, the government has set up a committee under the Reserve Bank of India deputy governor Shyamla Gopinath — to suggest the ways and means — for deregulating interest rates on small savings schemes. Small savings schemes mobilise huge amount of funds as they offer higher interest rates.
According to the Budget estimate, in 2010-11, these schemes may fetch Rs 50,300 crore, taking the total mobilisation to Rs 7,57,000 crore.
Funds mobilised under small savings schemes are disbursed to the central and state governments as debt. As the cost of the small savings funds are high, state governments pay higher interest rates (9.5%-10%) on the loans taken from these schemes compared to other sources in the market.
The 13th Finance Commission headed by former finance secretary Vijay Kelkar had suggested to bring down the interest rates on outstanding loans to 9% by the end of 2009-10.
But for this, the interest rates on small savings should also be brought down.
At the same time, according to the Fiscal Responsibility and Budget Management (FRBM) Act, states cannot borrow from open market beyond 4% of their fiscal deficits. Therefore, states are not able to benefit from prevailing lower interest rates in the market and take higher-interest loans from small savings.
The committee will also examine the new investment opportunities for the funds mobilized under small savings schemes. At present, the funds could be invested only in the central and state governments special securities. Committee will also review the administrative arrangement including the cost of operation.
Posted By: Abdul Rahiman T.P, Secretary, PIII.
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