In her fourth tranche of the coronavirus economic stimulus package, Union Finance Minister Nirmala Sitharaman Saturday announced structural reforms in eight sectors — coal, minerals, defence production, airspace management, airports, MRO, power distribution companies in UTs, space, and atomic energy.
The announcements were part of the cumulative package of Rs 20 lakh crore, nearly 10 per cent of GDP, to provide relief to various segments of the economy battered by the nationwide lockdown in the wake of the coronavirus pandemic. It was first announced by Prime Minister Narendra Modi earlier this week.
The Rs 20 lakh crore stimulus includes the government’s March 27 announcement of Rs 1.7 lakh crore package for free foodgrain and cash to the poor for three months and the Reserve Bank of India’s (RBI) measures worth Rs 5.6 lakh crore.
Prior to Saturday’s announcements, Sitharaman had announced relief measures for Micro, Small and Medium Enterprises (MSMEs), migrant labourers, farmers and street vendors, and the agriculture sector and allied activities.
Key highlights from Nirmala Sitharaman press conference:
# In the fourth tranche, FM said the focus of the fourth stimulus would be coal, minerals, defence production, civil aviation sector, power distribution companies in Union Territories, space sector and atomic energy sector.
# She said steps taken during the recent past include fast track investment clearance through an empowered group of secretaries. Project development cell has been set up in each ministry to prepare investable projects and coordinate with investors and central/state government.
# FM elaborated that states are being ranked on investment attractiveness to compete for new investments, adding that incentive schemes for the promotion of new champion sectors will be launched in sectors such as solar PV manufacturing and advanced cell battery storage.
# As many as 3,376 industrial parts/estates/SEZs in 5 lakh hectares have been mapped on Industrial Information System (IIS). All industrial parks will be ranked in 2020-21, she said.
Commericial mining of coal by Private sector, ending govt monopoly
# Most importantly, the FM announced commercial mining of coal by the private sector, ending government monopoly on the sector.
# She said commercial mining will be done on revenue sharing mechanism instead of the regime of fixed rupee/tonne. Nearly 50 blocks will be offered for bidding.
# Sitharaman said this is being done to reduce import of substitutable coal and increase self-reliance in coal production. Also, the government will invest Rs 50,000 crore for building evacuation infrastructure.
# Coal gasification and liquefication will be incentivised through rebate in revenue sharing, she said adding coal bed methane (CBM) production would also be encouraged.
Major reforms in mining of minerals
# FM announced major reforms in the mining of minerals through a seamless composite exploration-cum-production regime.
# 500 blocks of minerals will be auctioned in a composite exploration-cum-mining-cum-production regime.
# Also, a joint auction of bauxite and coal blocks would be done to enhance the aluminium industry’s competitiveness. This will help the aluminium industry reduce electricity costs.
# She said the distinction between captive and non-captive mines will be removed to allow the transfer of mining leases and sale of surplus unused minerals, leading to better efficiency and production.
‘Make in India’ for self-reliance in defence production
# The government will notify a list of weapons/platforms for ban on import with year-wise timelines, and will also ensure indigenisation of imported spares.
# A separate budget will be given for domestic capital procurement
# The government aims at improving autonomy, accountability and efficiency in Ordnance Suppliers by Corporatisation of Ordnance Factory Board
# FDI limit in defence manufacturing under automatic route to be raised from 49 per cent to 74 per cent
# Government to begin time-bound defence procurement and faster decision making by setting up a Project Management Unit (PMU) to support contract management; realistic setting of General Staff Qualitative Requirements of weapons/platforms; overhaul trial and testing procedures
Civil aviation reforms to bring in about Rs 1,000 crore a year
Only about 60% of Indian airspace is freely available. This means, airlines usually fly longer routes. To help rationalise this, FM Sitharaman says restrictions on utilisation of Indian air space will be eased so that civilian flying becomes more efficient. This will bring a total benefit of Rs 1000 crore a year for the aviation sector. This will also reduce fuel use and time, leading to a positive environmental impact.
Six more airports to be put up for auction
# The government has announced six more airports for auction under a PPE model. Annual revenue from this in the first round could come up to Rs 1,000 crore/year with an additional downpayment of Rs 2,300 crore for the Airports Authority of India.
# Additional investment by private players in 12 airports in the first and second rounds are expected to bring in around 13,000 crore
# Another six airports will be put out for the third round of bidding
India to become global hub for aircraft MRO
Most aircraft — civil and defence — fly abroad for repairs. Due to this, the government has announced rationalisation of Maintenance, Repair and Overhaul ecosystem to favour repairs and maintenence in the country
Tariff policy reform
# Consumer rights:
* DISCOM inefficiency not to burden consumers
* Standards of Service and associated penalties for DISCOMS
* DISCOMS to ensure adequate power; load-shedding to be penalized
# Promote Industry
* Progressive reduction in cross subsidies
* Time bound grant of open access
* Generation and transmission project developers to be selected competitively
# Sustainability of Sector
* No regulatory assets
* Timely payment of gencos
* DBT of subsidy; smart prepaid meters
Privatization of distriution in UTs
#Sub-optimal performance of power distribution and supply
# Power departments/utilities in Union Territories will be privatised
# Provide a model for emulation by other utilities across the country
Govt to boost private sector investments in social-infrastructure projects
The government says it will boost private sector investments in social-infrastructure projects, like hospitals, by revamping the Viability Gap Funding Scheme. The total outlay for this has been pegged at Rs 8,100 crore.
# The government will enhance the quantum of viability gap funding up to 30 per cent each of total project cost as VGF by Centre and State/Statutory bodies
# For other sectors, VGP existing support of 20% each from GoI and States/Statutuory Bodies shall continue
# Projects to be proposed by Central Ministries/State governments and statutory entities
Private sector to be given access space sector: Govt
# Providing level-playing field for private companies in satellites, launches and space-based services
# Providing predictable policy and regulatory environment to private players
# Private sector will be allowed to use ISRO facilities and other relevant assets to improve their capabilities
# Future projects for planetary exploration, outer space travel etc to be open to private sector
# Liberal geo-spatial data policy for providing remove-sensing data to tech-entrepreneurs
Reforms in the atomic energy sector
# Govt to establish a research reactor in PPE basis for production of medical isotopes to promote welfare of humanity through affordable treatment for cancer and other diseases.
# The government will also establish facilities to use irradiation technology for food preservations, again in PPE mode. This technology will compliment agricultural reforms and assist farmers.
# The government will lastly link India’s robust start-up ecosystem to the nuclear sector to foster a synergy between research facilities and tech-entrepreneurs.
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