Focus on New Horizons of Growth with Private Sector Participants: Part 4 of Series “Honorable Union FM Announcements”

In the strings of announcements, on 16th May 2020, the announcements were focused on making India self-reliant and face global level challenges alongside simpler participation of the individuals in building economy following PM Narendra Modis’s “Reform, Perform & Transform”.

In this write-up, we shall discuss in brief the major reforms for the development of the structural changes in the form of New Horizons with an object of employment generation, growth of economy amongst others for making “Atmanirbhar Bharat”. The major 8 Areas which are covered as under:

  • Coal,
  • Mineral,
  • Difference Production,
  • Aerospace :
    • Airspace management,
    • Airports,
    • Maintenance, Repair & Overhaul (MRO)
  • Power Distribution Companies in UTs,
  • Space, and
  • Atomic Energy

Recalling the Reforms & Initiatives of the Government since 2014

  • De-congesting the sector: By giving the boost for growth and employment
  • Deep Systemic Reforms
  • Direct Benefit Transfer to the accounts of the beneficiaries.
  • Goods & Services Tax: One Nation One Market.
  • Insolvency & Solvency Code (IBC): For resolving constraints of SARFAESI &  allied laws.
  • Several Measures under Ease of Doing Business (EODB): For attractive investment destination.
  • Banking Reforms: It is needed for the following:
    • Ensuring Liquidity
    • Professional & Expert management; and
    • Independency to operate.
  • Direct Taxation Reforms
  • Power Sector Reforms ( UDAY Scheme )
  • Coal Sector Reforms

New Reforms Announced: Fast Track Investment Clearance & Incentive Scheme for Champion Sectors

  • With an initiative to bring the new innovative ways to do the business.
  • As India has been recognized as the world level market with the potential to grow multi-folds, the government has launched the fast track clearance mechanism for states to attract new investments which are based on new ways of doing business.
  • EGoS will be the authority for providing Fast Track Investment Clearance.
  • Under the said initiative, the Project Development Cell in each Ministry   shall engage in the following activities:
    • Prepare a list of investible projects
    • Coordinate with investors
    • Coordinate with Central/State Governments
  • The Ranking of states will be done to increase competitiveness.
  • Further, incentive schemes shall be followed to promote the  New Champion Sectors  which shall be focused on sectors to grow:
    • Solar PV manufacturing;
    • Advanced Cell Battery Storage etc.

Industrial Infrastructure: Upgradation of Infrastructure

  • To address the issue of:
    • Being using the industrial land or clusters of land being unutilized; or
    • Not being under proper utilization.
  • With the use of ICT and GPS- GIS mapping, the land parcels are
    • Identification,
    • Location clear are identified,
    • Common areas that need to be set up will be made.
  • In total, 3376 industrial parks/estates/SEZs in  5 Lakh hectare shall be mapped on Industrial Information System (IIS).
  • Subsequently, all industrial parks will be ranked in 2020-21.

Reforms in Coal Sector: Allowed Private Sector Participation & Disclosure

  • Commercialization of Coal sector, on Revenue-sharing basis with an aim of:
    • More coal availability;
    • More coal availability at market price;
    • Improved efficiency ;
    • Liberation for entries in the market for a range of coal blocks
    • Lowering the environment impact
    • Evolving best sustainable practices
  • As India is recognized as 3rd Largest coal producer, as well as the coal deposits there is need to promote sector with Ease of Doing Business (EODB) practices which include:
    • Mining Simplification Plan;
    • Online Readily Accessible of Plans;
    • Allowed a 40% increase in annual production.
  • Incentivization for the conversion of Coal into the gas subject to regulations
    • With the best utilization of resources;
    • Gasification of coal;
    • Simultaneously honoring commitments of India vis –vis the world.
  • Auctioning of Coal Bed Methane (CBM) Extraction Rights which are with Coal India Limited (CIL) and remained untapped shall be utilized properly.
  • Allocation of Rs. 50,000 crore for creating evacuation infrastructure.
  • The Entry norms as being liberalized stands for:
    • Nearly 50 blocks shall be offered immediately
    • No eligibility conditions
    • Only upon upfront conditions with a cap.
    • Now, any party can bid for coal block and sell in the open market
    • The coal bidders shall be given discounts and assistance.
    • Partial coal blocks can even be auctioned.
  • Concessions to Consumers of CIL
    • in commercial loans, Approx Rs. 5,000 crore offered.
    • Reserve prices in auctions for non-power consumers reduced.
    • Credit terms eased.
    • Lifting period

Reforms in Mineral Sector: Auctioning & Rationalization of Procedures

  • Introduction & Crystallization of process of mining through seamless composite exploration  cum mining cum production 
    • Removing the restrictions in getting the raw materials which are of different domain like Boxed.
    • The joint auction is introduced for getting bauxite and coal as raw materials under one roof.
    • Nearly 500 mining blocks would be offered through an open and transparent auction.
    • To promote the production of
  • Simplification and removing the distinction between the Captive & Non-Captive Mines  for the core benefit of the economy as it serves following :
    • Allow transfer of mining leases,
    • Sale of a surplus of unused minerals
    • Better efficiency of in mining and production
  • Development of the Mineral Index for different minerals for evaluation and increase competitiveness.
  • Rationalization of stamp duty payable at the time of award of mining leases.

Reforms in Defense Sector: Manufacturing of Spares & Corporatization of OFB

  • To provide the defense sector under Make in India, we need to self- reliant.
  • To notify the list of weapons and platforms which shall not be allowed of imports but bought from India is ultimately banned.
  • Such production shall be followed by the General Staff Qualitative Requirements (GSQR) standards.
  • Indigenization of Some imported spares subject to certain international standards.
  • A separate budget allocation shall be made prospectively to ensure the production of such equipment to support the increased import bill  of defense.
  • The Corporatization of Ordnance Factory Board (OFB) enables the Board to be listed and traded on Stock Exchange and to be managed professionally with an aim to:
    • improve autonomy,
    • improve accountability,
    • improve efficiency
  • The FDI limit has been increased to 74% from 49% under Automatic Route.
  • The Time bound defense procurement process & Faster Decision Making Process. The mentioned object can be achieved by following reforms as:
    • Setting up of Project Management Unit (PMU) to support contract Management;
    • Overhauling test and trial procedures.

Reforms in Civil Aviation: Global Hub, Economies in Operations through Rationalization

  • Rationalization of Air Space :
    • This initiative shall forthwith resolve the issue of more cost of traveling, more fuel bill, longer time consumption in the traveling.
    • This move will benefit the aviation sector by Rs. 1,000 crores by making more than 60% are Indian Airspace available with easier norms to fly.
    • Further, impacts the environment in a positive direction in terms of better utilization of capacities and resources.
  • Auctioning of Airports
    • Currently, 3 airports out of 6 airports are in running condition are in operation under PPP Mode.
    • Further, 6 more airports by the Airports Authority of India have been lined for auction, which shall be done on an immediate basis.
    • The amount of investment by private players is expected to be Rs.13,000 crores in all 12 airports.
    • Moreover, for the next round i.e., in 3rd Round 6 other airports have been defined for bidding.
    • Such Initiative shall enable:
      • Easy access to funds
      • Better management
      • Improvement by Competition
    • A Move to Make Global Hub For Aircraft Maintenance, Repair & Overhaul
      • To reduce the time consumption in MRO of Aircrafts,
      • Proper utilization of experts through the establishment of global hub,
      • Having ripple effect on payments by consumers,
      • After successful implementation on aircraft, the defense aircrafts MRO can be initiated within India
      • Attracting Foreign Exchange.
      • The maintenance cost of airlines will reduce.
      • Allocation of Rs.2,000 crore to MRO for the time frame of 3 years.

Power Sector: Introduction of Tariff Policy Reforms

  • Public Tariff Policy: For ensuring reforms and removing deficiencies will be announced in three different areas: 
  1. Consumer Rights
  • Removal of DISCOM inefficiencies for ultimate beneficiary i.e., consumers.
  • Promoting Standards of Service and penalties for DISCOMs
  • Ensuring adequate power; load-shedding and penal provisions
  1. Promote Industry
  • To make a progressive reduction in cross-subsidies i.e., allowing the benefits to another sector participants.
  • Enabling Time-bound grant of open access
  • Generation and transmission project developers to be selected competitively
  1. Sustainability of Sector
  • With no Regulatory Assets, promoting stability amongst the industry wide.
  • Timely payment of power Generation companies.
  • Transferring subsidy through direct benefit transfer;
  • Smart prepaid meters
  • Privatization of Distribution in UTs
  • Reduction of Sub-optimal performance of power distribution & supply throughout the sector.
  • The Power Departments / Utilities in Union Territories will be privatized to ensure completion and better delivery to consumers.
  • This initiative will lead to better service to consumers and improvement in operational and financial efficiency in Distribution.
  • Moreover, it aims to provide a model for emulation by other Utilities across the country.
  • Boosting Social Infrastructure:

Privatization in Space Reforms:

  • Revolutionary steps are announced by the government in the space sector which includes:-
    • Privatization of space sector
    • To make the sector more competitive to deliver best results
  • The Privatization will serve the following:
    • To ensure better standards and
    • Enhanced quality in satellites, launches, and space-based services.
    • It ensures a predictable policy.
    • It provides a proper sector regulator for guidance and assistance.
    • The private Participants will be allowed for the utilization of ISRO facilities.
    • Future projects for planetary exploration, outer travel, etc.
    • Development of Liberal Geo- spatial policy for providing remote sensing data to tech entrepreneurs.

PPP Mode : Atomic Energy Reforms

  • Establishment of Research Reactor through PPP Mode for following objects for Production of medical isotopes enables:
    • Welfare of humanity
    • Affordable treatment for cancer and other diseases.
    • Utilization of irradiation technology for food preservation
    • Promoting agricultural reforms
    • To assist farmers
  • Technology Development cum Incubation Centres:
    • To promote eco –startup ecosystem  to nuclear sector
    • Fostering synergy between research facilities and tech entrepreneurs.

All in the above sectors which the government has announced it is only after discussing with sectoral Boards & Committees & before finalizing such measures and empowering the private sector to share revenue in different sectors while enabling the development of different sectors. Besides that Government being a moderator of various sectors still intact.