Centre approves public procurement Bill

Business Standard, April 13, 2012

Royalty on coal, lignite to be ad valorem SPV for IT support to GST rollout cleared

Ahead of the Parliament session, the Union Cabinet on Thursday approved a legislation that seeks to cleanse the system of procurement woes for public entities in the country. The Cabinet also cleared a proposal to switch from the current mixed structure to ad valorem royalty on coal and lignite.

The public procurement Bill would be introduced in the coming session of Parliament, which starts from Monday, an official statement said.

The draft Public Procurement Bill, 2011, seeks to regulate any government purchase of more than Rs 50 lakh through a transparent bidding process. The Bill, touted as Congress chief Sonia Gandhi’s pet project, would also have a provision to debar bidders found engaged in corrupt practices, sources said.


  • CABINET OKAYS draft public procurement Bill 2011
  • THE BILL WILL ensure transparency in procurement for public enterprises. It would be introduced when Parliament meets next week
  • CABINET CLEARS proposal to switch to ad valorem royalty for coal and lignite
  • MOVE expected to generate an additional revenue of ~1,050 crore for coal and lignite bearing states
  • CABINET ALSO clears proposal to set up a special purpose vehicle for setting up an IT network for GST

Currently, there is no overarching legislation governing public procurement by the central government and central public sector enterprises and such purchases are governed by the General Financial Rules, 2005.

The draft Bill also provides for a jail term ranging from six months to five years for public servants found guilty of accepting bribes from bidders of government contracts. The Bill has been framed according to the recommendations of a committee headed by former bureaucrat Vinod Dhall. These were accepted by a group of ministers headed by finance minister Pranab Mukherjee.

On coal, the Cabinet fixed the ad valorem royalty at 14 per cent, while that for lignite has been fixed at six per cent. Currently, royalty on coal is Rs 180 a tonne and five per cent of the sales price at pit mouth. The proposal is expected to generate additional Rs 1,050 crore of revenue in coal-bearing states, an official statement said.

The average increase in royalty for coal would be about 17.31 per cent and for lignite, it is expected to be about 14.53 per cent. Jharkhand, Andhra Pradesh, Madhya Pradesh, Uttar Pradesh, Tamil Nadu, Odisha, Nagaland, Meghalaya, Maharashtra, Chhattisgarh, Assam and Arunachal Pradesh are major coal- and lignite-producing states. Currently, these states earn a royalty of around Rs 5,950 crore annually from coal and lignite exploration.

The Cabinet also cleared a proposal to set up a special purpose vehicle (SPV) to put in place a system for an information technology network for the proposed Goods and Services Tax (GST). The vehicle, to be called the GSTN SPV, would be incorporated as a non-government, private company in which the government would put equity capital of Rs 10 crore. The Centre and states would have stakes of 24.5 per cent each in the SPV. “Non-government institutions would hold 51 per cent equity,” the statement said.

The Cabinet also approved a joint venture between state-owned Neyveli Lignite Corporation’s Uttar Pradesh Rajya Vidyut Utpadan Nigam for setting up a 1,980-Mw coal-based thermal power project at Ghatmapur, Kanpur. The initial investment required for the power project would be about Rs 10,000 crore. The UP government has given its in-principle approval to allocate 2,500 acres of land and 80 cusecs of water for the project.

Neyveli Lignite has also evinced interest in participating in the bidding process of ultra mega power projects in Tamil Nadu, Odisha, Maharashtra, Karnataka and Chhattisgarh.
Other key decisions

To introduce marriage registration Bill

The Union Cabinet on Thursday decided to introduce a Bill in the coming session of Parliament that would make registration of marriages compulsory. The registration would be mandatory for recording of births and deaths, notwithstanding one’s religious affiliation, providing legal protection, especially in cases of inter-religious matrimony.

The Cabinet also approved the introduction of the Anand Karaj Marriage Act, 1909, to provide for registration of Sikh marriages, fulfilling a long standing demand of the community.

Enhances ICT training

The Cabinet also approved a project to enhance ICT training and education in the Northeast with a total Budget outlay of Rs 388.68 crore and approved an additional grant of Rs 2,065 crore for the Swavalamban pension scheme that would benefit seven million unorganised sector workers.

Freezes CCI interest payment

The Cabinet also okayed a proposal to freeze and defer payment of interest by Cement Corporation of India on Rs 128.62-crore of loan sanctioned to the company.

Climate change

The government also approved a proposal to send a communiqué to the United Nations, listing the steps taken by it to tackle the threat of global warming.

Scheduled Castes

More communities from Kerala, Madhya Pradesh, Odisha and Tripura were added to the list of Scheduled Castes by the government.

The news item can also be viewed at: