Discuss the main points of structural reforms highlighted by the Finan...
Jun 12, 2020
Discuss the main points of structural reforms highlighted by the Finance Minister recently.
Union Finance Minister has 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.
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.
Steps are being taken to 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.
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 the Industrial Information System (IIS).
Most importantly, the FM announced commercial mining of coal by the private sector, ending government monopoly on the sector.
The 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.
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.
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.
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.
The FDI limit in defence manufacturing under automatic route to be raised from 49 per cent to 74 per cent
Only about 60% of Indian airspace is freely available. This means, airlines usually fly longer routes.
To help rationalise this, 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.
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 down payment 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
India is to become a global hub for aircraft MRO as 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 maintenance in the country.