Daily News Mail - News of 14/06/2015

Rs. 1,500-cr. nuclear insurance pool set up

• The Union government has launched an insurance pool of Rs. 1,500 crore, mandatory under the Civil Liability for Nuclear Damage Act to offset the financial burden on foreign nuclear suppliers in case of an accident.
• Making the announcement here on June 13, Union Minister of State in the Department of Atomic Energy Jitendra Singh said several projects such as the long-pending Gorakhpur Haryana Anu Vidyut Pariyojna held up in the absence of the pool were now expected to move forward.
• Clauses in the Act, which give the operator the right to legal recourse and allow it to sue the suppliers in case of any accident, were seen as being a major hindrance to the growth of the nuclear industry. These concerns led to the formation of the Indian nuclear insurance pool.
• R.K. Sinha, Secretary in the Department of Atomic Energy, said this would be a solution for suppliers’ concerns about liability from nuclear risks.
• Under the pool, nuclear operators’ liability and suppliers’ special contingency insurance policies will be offered.
• The pool has been set up by General Insurance Corporation of India and 11 other non-life insurers, including New India, Oriental Insurance, National Insurance and United India Insurance, from the public sector, apart from private insurance companies.
• Y. Ramulu, General Manager of General Insurance Corporation (GIC), the fund operator, said a “shortfall of Rs. 600 crore” was met when a domestic insurance company chipped in with Rs. 100 crore more. “Remaining gap [Rs. 500 crore] was filled in by the British Nuclear Insurance Pool,” he said. “This will address the concern of the suppliers such as the Gorakhpur Haryana project and also of foreign players. Now we have a policy for the entire nuclear industry of the country.”

Make train services viable: panel

• Improving accountability, decentralising power and setting up an independent regulator are the key elements for the restructuring of Indian Railways, NITI Aayog member Bibek Debroy says.
• The panel on restructuring of the Indian Railways, headed by Mr. Debroy, submitted its final report on June 12. The committee has set a five-year timeframe for implementing its recommendations and has suggested doing away with the Railway Budget, Dr. Debroy said.
• “Without commercial accounting, I do not even know what the rate of return on the projects is. This is not just about attracting private capital flows, but even with government and Railways, you need to know what your return is. So if I am borrowing the funds at, say, 7 per cent, I need to know what the return on projects is … at the end of it all, I need to do the cost-benefit analysis of how much it costs to run a train and is that train viable. You cannot do that without commercial accounting,” he said.
• He said even if the projects were taken up for fulfilling social objectives, they needed to be accounted for and clearly quantified and funded out of the Budget. “Because, if we have the Railway Budget, the expectation of every MP is that give me a train for my constituency. And you are setting up a regulator, which is going to recommend or set the tariffs. So there is no purpose to the Budget,” he said.
• On the independent regulator, Mr. Debroy said the recommendation was to set it up statutorily and not executively. “Why statutorily? Because we want the regulator to be independent and we want the regulator to be accountable to Parliament. We want the regulator to be outside the clutches of Rail Bhavan with a separate budget. The Ministry would set only policies.”

India’s foreign exchange reserves grew by only $239.4 million and stood at $352.71 billion in the week ended June 5, 2015, according to the latest weekly statistical supplement of the Reserve Bank of India.