OBJECTIVES

  • Five pillars of Nation – Economy, Infrastructure, Technology, Demography, Demand
  • Special Economic Package of INR 20 Lakh Crores , 10% of India’s GDP
  • Focus for ANB package is Land, Labour, Liquidity and Law
  • Aims to promote Local Products – Be Vocal and Buy Local
  • Main focus of Fourth package was on  Structural Reforms

  Measures taken in following sectors

COAL SECTOR

I. Commercial Mining in Coal Sector:

With the aim to reduce import of substitutable coal and increase Self-reliance in coal production, the reforms introduce an end to govt. monopoly in the Coal sector and invites private organizations to increase competition and transparency in the Coal Sector through:

  • Revenue sharing mechanism instead of regime of fixed Rupee per tonne
  • Allowing any party to bid for a coal block and sell in the open market instead of an earlier regime where only captive consumers with end-use ownership could bid
  • Liberalizing entry norms with no eligibility conditions and only upfront payment with a ceiling
  • Also, the GoI proposes to offer nearly 50 blocks immediately
  • Exploration-cum-production regime for partially explored blocks wherein partially explored blocks will also be auctioned allowing private sector participation in exploration
  • Production earlier than scheduled will be incentivized through rebate in revenue-share

II. Diversification of Opportunities and Infrastructure development:

  • Coal Gasification / Liquefaction to be incentivized through rebate in revenue share which will result in significantly lower environment impact and assist India in switching to a gas-based economy.
  • GoI proposes to invest INR 50,000 crores in development of Evacuation Infrastructure.
  • This includes INR 18,000 crores worth of investment in mechanized transfer of coal (conveyor belts) from mines to railway sidings

III. Liberalized Regime in Coal Sector :

With the aim to reduce import of substitutable coal and increase Self-reliance in coal production, the reforms introduce an end to govt. monopoly in the Coal sector and invites private organizations to increase competition and transparency in the Coal Sector through:

  • The GoI proposes to auction Coal Bed Methane (CBM) extraction rights from Coal India Limited’s (CIL) coal mines
  • Various measures such as Mining Plan simplification  to be implemented for Ease of doing business measures
  • Relief worth INR 5,000 crore to be offered in the form of concessions in commercial terms to CIL’s consumers (by way of reserve price in auctions for non-power consumers reduced, credit terms eased and lifting period enhanced)

MINING INDUSTRY

I. Structural reforms for Mining Sector:

Various structural reforms are proposed to boost growth, employment and bring state-of-the-art technology especially in exploration through:

  • Introduction of a seamless composite exploration-cum-mining-cum-production regime
  • Offering 500 mining blocks through an open and transparent auction process
  • Introduce Joint Auction of Bauxite and Coal mineral blocks to enhance Aluminum Industry’s competitiveness.
  • Transfer of mining leases and sale of surplus unused minerals shall now be allowed
  • The above will be achieved by way of removal of  distinction between captive and non-captive mines, leading to better efficiency in mining and production
  • A Mineral Index shall be developed for different minerals by Ministry of Mines
  • There is also a proposal for rationalization of stamp duty payable at the time of award of mining leases

CIVIL AVIATION

I. Airspace Management for Civil Aviation:

Currently only 60% of the Indian Airspace is freely available for civil Aviation. Following measures taken by the Central Government leads to efficient use of Airspace in the country.

  • Easy of restriction on utilization of the Indian Air Space, so that civilian flying become more efficient.
  • Optimal utilization of airspace will leads to reduction in fuel usage of the Indian Airlines and saving in time of passengers.
  • This will bring a total benefit of about INR 1,000 crores per year for the aviation sector.
  • The Propose measure will have positive impact on environment which is in line with country’s commitment towards global warming and climate change.

II. World class Airports through  PPP model:

Currently Airport Authority of India (AAI) has awarded 3 airports out of 6 bid for Operation and Maintenance on Public-Private Partnership (PPP) basis.

  • Annual Revenue of 6 airports in 1st round – INR 1,000 crores against current profit of 540 crores per year.
  • AAI will also get a down payment of INR 2,300 crores.
  • 6 more airports identified for 2nd round. Bid process to commence immediately.
  • Additional Investment by private players in 12 airports in 1st and 2nd rounds expected around INR 13,000 crores
  • Another 6 airports will be put out for the third round of bidding.

III. Maintenance, Repair and Overhaul (MRO):

Currently Indian Airlines send their aircraft to Australia, Far East country or Western country for regular maintenance and Overhaul purpose. The following measures leads India to become a global hub for the Aircraft Maintenance, Repair and Overhaul (MRO) sector:

  • Tax regime for MRO ecosystem has been rationalized.
  • Major engine manufacturers in the world would set up engine repair facilities in India in the coming years.
  • This leads to increase in Aircraft components repairs and airframe maintenance from INR 800 crores to INR 2,000 crores in three years.
  • Convergence between defense sector and the civil MROs will be established to reduce maintenance cost and to create economies of scale.
  • The overall maintenance cost for airlines will come down.

ATOMIC ENERGY

  • Establish research reactor in PPP mode for production of medical isotopes – promote welfare of humanity through affordable  treatment for cancer and other diseases.
  • Establish facilities in PPP mode to use irradiation technology for food preservation – to compliment agricultural reforms and assist farmers.
  • Link India’s robust start-up ecosystem to nuclear sector – Technology Development cum Incubation Centres will be set up for fostering synergy between research facilities  and tech-entrepreneurs.

SELF RELIANCE IN DEFENSE PRODUCTION

“Make in India” push for Defense production in India to reduce huge Defense import bill of the country. India has spent more than $100 Billion on buying new weapons and system during 2008-17.

  • The Central Government with consultation of Ministry of Defense will notify the list of weapons/platforms for ban on import with year wise timelines   
  • The step would be taken to indigenise the imported spares in India.
  • The creation of separate provision in every year’s budget for domestic capital procurement.
  • The corporatization of Ordnance Factory Board. It leads to better accountability, efficiency and autonomy in ordnance supplies.
  • FDI limits in Defence Manufacturing increased to 74% from 49% (under automatic route)
  • Overhauling Trial and Testing procedures for better and faster procurement of Defense equipment.
  • Realistic setting of General Staff Qualitative Requirements (GSQINR) of weapons/platforms.

SPACE SECTOR

In order to boost space activities, GoI has decided to allow Indian private sector to be a co-traveller in India’s space sector journey by providing predictable policy and regulatory  environment.

  • Will provide level playing field for private companies in satellites, launches and space-based  services.
  • Private sector will be allowed to use ISRO facilities and other relevant assets to improve their capacities.
  • Future projects for planetary exploration, outer space travel etc to be open for private sector.
  • Liberal geo-spatial data policy for providing remote-sensing data to tech-entrepreneurs.

SOCIAL INFRASTRUCTURE

  • GoI plans boosting private sector investment in Social Infrastructure through revamped Viability Gap Funding Scheme.
  • Government will enhance the quantum of Viability Gap Funding upto 30% each of Total Project Cost as VGF by Centre and State/Statutory Bodies.
  • For other sectors, VGF existing support of 20 % each  from GoI and States/Statutory Bodies shall continue
  • Total outlay is INR 8,100 crores
  • Projects to be proposed by Central Ministries/ State Government/ Statutory entities.

POWER DISTRIBUTION RIGHTS

  • Power Departments/Utilities in Union Territories will be privatised.
  • Sub-optimal performance of power  distribution & supply
  • Will lead to better service to consumers  and improvement in operational and  financial efficiency in Distribution
  • Provide a model for emulation by other Utilities across the country.

BJAA THOUGHTS

Unveiling the fourth package, FM laid emphasis on wide-ranging structural reforms across eight critical sectors with an aim to make India counter global challenges.                

Power – Private ownership should bring in greater efficiency and better governance and help address some  of the deep-seated problems  of sector. The UTs are a good place to start, through it should propagated further into state- owned discoms.   

Defence – This announcement serves the two cardinal purpose of enabling foreign investment in defense production while also ensuring greater self-reliance in this sector. India was the world’s second largest arms importer of major arms in 2014-18 and accounted for 9.5% of the global total, as per latest report published by the Stockholm International Peace Research Institute (SIPRI). Hence, this announcement will result in substantial reduction in import bills along with forex saving and will go towards promoting self-reliance as well as improving our defence security.

Aviation – Today’s announcement will play key role in business recovery of this sector. Airport PPP transaction will help unlock value for AAI and state governments, given investor interest and long-term potential of the Indian Market. Optimizing use of airspace opens up the possibility of cutting fuel burn significantly, improving turnarounds on routes.

Coal & Minerals – Private sector participation in coal mining is a path breaking reforms, which have a potential to act as a multiplier for several sectors. The commercial mining of coal by the private sector which will be done on revenue sharing mechanism instead of the regime of fixed rupee/tonne ending government monopoly on the sector. This will likely bring efficiency into coal sector by moving away from era of monopoly to competition and lower power tariffs. This move will lead to higher investments and create lakhs of direct and indirect jobs.

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