Cabinet Committee on Economic Affairs (CCEA) Current Affairs - 2020

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Revision of interest subvention under Diary Processing and Infrastructure Development Fund from 2% to 2.5%

The Cabinet Committee on Economic Affairs recently approved its revision of interest subvention rates from 2% to 2.5% per annum. This is being done under Diary Processing and Infrastructure Development Fund (DIDF).

Highlights

Under the DIDF, GoI will now provide interest subvention up to 2.5% to NABARD till 2030. This shall enable NABARD in devising its own strategy of borrowing. In turn, it will be able to provide low cost of funds to milk unions.

Impacts

There are more than 95 lakh milk producers that will be benefitted with this move. It will help in establishment of 28,000 milk coolers and create 210 metric tonnes of milk drying capacity.

Implementation

The major activities that are covered under the fund includes chilling infrastructure, electronic adulteration testing kit, modernization of milk processing facilities and project management.

DIDF scheme

The DIDF Scheme was announced in Union Budget 2017-18 by the Ministry of Finance. Under the scheme DIDF considerable amount is contributed by NABARD to the National Diary Development Board and National Cooperative Development Corporation.

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Union Cabinet Approves Abolition of FIPB

The Union Cabinet has approved the abolition of 25 year old FIPB. Henceforth, concerned ministries will be responsible for direct approval of foreign investment proposals. The decision falls in line with Finance Minister Arun Jaitley’s proposal to scrap FIPB in this year’s Union Budget.

FIPB was constituted in the mid-nineties under the Prime Minister’s Office following economic liberalisation.

Rationale

Over 90% of the FDI inflows in value terms enters through automatic route. The government expects that scrapping of FIPB would help in ease of doing business. At present, only 11 sectors, including defence and retail trading needs government approval for foreign direct investment (FDI).

New Mechanism

FDI proposals would be approved by the ministries concerned by following the standard operating procedure approved by the Cabinet. Those 11 sectors that require approval would be dealt directly by the concerned ministry.

In proposals related to security, the proposals will also need to require the approval of Home Ministry.

Those proposals which are presently pending before the FIPB will be sent back to the ministries concerned.

The FDI proposals above Rs 5,000 crore will continue to come under the purview of the Cabinet Committee on Economic Affairs (CCEA). 

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