Cabinet Decision Current Affairs
Union Cabinet has decided to raise contribution of Central Government to National Pension System (NPS) corpus of its employees from 10% to 14%. This will increase in eventual accumulated corpus of all central government employees covered by NPS. There are 18 lakh central government employees at present. The revenue impact from higher government contribution to employees’ corpus is expected to be around Rs.2,840 crore for 2019-20 and will be in nature of a recurring expenditure.
Government also has decided to make NPS fully tax free, making it on par with the provident fund scheme. It has decided to exempt income tax that is applicable on part of NPS corpus that is withdrawn on retirement. At present, while exiting scheme, 60% of corpus could be withdrawn and 20% of withdrawn amount is taxable. This portion now has been made tax free. The remaining part that could be used to buy annuities is anyway tax free. With this decision, NPS has acquired parity with provident fund savings, which are not taxed at any of three stages of saving, profit accrual or exit.
National Pension System (NPS)
It is easily accessible, low cost, tax-efficient, flexible and portable retirement savings account. It was launched in 2004 and was initially introduced for new Government recruits (except armed forces). It aims to institute pension reforms in country and to inculcate habit of saving for retirement amongst the citizens. Its objective is to provide retirement income to all the citizens. Under it, individual contributes to his retirement account. Employer can also co-contribute for social security/welfare of individual. It was extended for all citizens of country from May 2009 including the unorganised sector workers on voluntary basis. NPS is governed and administered by Pension Fund Regulatory and Development Authority (PFRDA). Currently, any Indian between age of 18 to 65 years may voluntarily join the NPS. NRI can open an NPS account, however contributions made by NRI are subject to regulatory requirements as prescribed by RBI and FEMA from time to time.
The Cabinet Committee on Economic Affairs (CCEA) has approved methodology for auction of coal mines/blocks for sale of coal to private sector under Coal Mines (Special Provisions) Act, 2015 and Mines and Minerals (Development and Regulation) Act, 1957.
This decision opens coal sector to commercial mining by private eblntiti, ending 41 year old monopoly ot state owned Coal India Ltd (CIL). It will allow power cement and steel producers to source fuel more efficiently.
Supreme Court in its September 2014 order had cancelled 204 coal mines and blocks allocated to various Government and Private Companies since 1993 under the provisions of Coal Mines (Nationalisation) Act, 1973. The pursuance of this order, Parliament had enacted Coal Mines (Special Provisions) Act, 2015 to bring transparency and accountability for allocation of coal mines by way of auction and allotment for the sale of coal.
Under this methodology
The auction will be ascending forward auction whereby bid parameter will be price offer in Rs./tonne which will be paid to State Government on actual production of coal. There shall be no restriction on the sale and utilization of coal from coal mine.
Moreover, the entire revenue from auction of coal mines will accrue to coal bearing States. It will incentivise these states to utilize this increased revenue for growth and development of backward areas and their inhabitants including tribals.
The methodology gives highest priority to transparency, ease of doing business and ensuring that natural resources are used for national development. It opens commercial coal mining for private sector and will help in boosting the economy. It is most ambitious coal sector reform since the nationalisation of this sector in 1973.
It will bring efficiency by moving coal mining from era of monopoly to competition and enable use of best possible technology. It will also attract higher investments and create more jobs in mining sector. It will also lead to the availability of low cost power as 70% of India’s electricity is generated from thermal power plants. States in Eastern part of the country will be especially benefited from this new methodology.