Structural reforms in 8 key sectors to boost economy, says FM Sitharaman

Finance Minister Nirmala Sitharaman on Saturday announced the fourth tranche of the ₹20 lakh crore economic stimulus package focussing on structural reforms in various crucial sectors of the Indian economy. The reforms will provide an impetus to those sectors which are new areas of growth, unleash new investment opportunities, lead to more production and in turn generate more jobs, the minister said.

“We are going to focus on a total of eight sectors today -- Coal, Minerals, Defence Production, Air Space Management and Airports, MROs, Power Distribution Companies, Space and Atomic Energy,” Sitharaman said at the daily news briefing to announce the Centre’s detailed economic package.

“Many sectors need policy simplification, to make it simpler for people to understand what the sector can give, participate in activities and bring about transparency. Once we decongest these sectors, we can boost the sector, for growth and additional jobs,” the finance minister said. Incentive schemes for the promotion of New Champion Sectors will also be launched in Solar PV manufacturing and advanced cell battery storage among others.

ALSO READ | FDI in defence sector hiked from 49% to 74%, says FM Nirmala Sitharaman

Referring to inclusiveness for states, the minister said states would be ranked on investment opportunities and the ability to attract new investments. “Schemes will be implemented in states through challenge mode for Industrial Cluster Upgradation of common infrastructure facilities and connectivity,” the finance minister said. In a consolidated effort towards a self-reliant India, policy reforms will be put on fast track and the ease of doing business will be further upgraded.

Announcing the introduction of commercial mining in the coal sector, Sitharaman said, “The government will introduce competition, transparency, and private sector participation in the Coal sector through revenue sharing mechanism instead of the regime of fixed rupee per tonne.”

“Commercial mining is being introduced in the coal sector and the age-old government monopoly is being removed. The commercial mining of coal will be done on a revenue sharing basis. An amount of ₹50,000 crore is being provided for evacuation infrastructure in the coal sector,” Sitharaman said.

ALSO READ | Govt will notify list of weapons for ban on import with year wise timelines: Sitharaman

Regulations are required when there is a shortage of raw material. Coal is not environment-friendly and it needs to be kept in mind that the country’s environment commitments are honoured while converting coal into gas or other fuel, the minister said.

At least 500 mining blocks would be offered through an open and transparent auction process for the commercial mining initiative. There will also be a joint auction of bauxite and coal mineral blocks to enhance the Aluminum industry’s competitiveness.

“The investment of Rs. 50,000 crore is for the evacuation of enhanced CIL’s (Coal India Limited) target of 1 billion tonnes of coal production by 2023-24 plus coal production from private blocks,” the finance minister said.

There will be rationalisation of stamp duty payable at the time of awarding mining leases. The distinction between the captive and non- captive mines will be removed to allow transfer of mining leases and sale of surplus unused minerals in the Mineral sector. The Ministry of Mines is in the process of creating a Mining Index for different minerals as part of the structural reforms.

In defence production, the finance minister said for self-reliance a list of weapons and platforms will be notified and a ban imposed on import with year-wise timelines. There will be indigenisation of imported spares so that defence equipment is both made and bought in India

“We shall notify a list of weapons and platforms that will not be allowed for import…these will be banned and have to be bought in India. Those list of items which will be notified can now only be bought in India by the defence sector. To improve the autonomy accountability we intend to start corporatization of ordinance factory boards for better management and for subsequent listing on the stock market,” the minister said.

Foreign Direct Investment limit in defence manufacturing under the automatic route is being raised from 49% to 74%, the government has decided.

In Civil Aviation, Sitharaman indicated that “Restrictions on the utilisation of Indian Air Space will be eased so that civilian flying becomes more efficient. We will bring a total benefit of ₹1000 crore per year for the aviation sector.”

A total of six airports will be up for auction by the Airports Authority of India (AAI) and it will be done on a Public Private Partnership basis. India will also be promoted as a MRO hub to save on additional costs for the aviation sector.

Sitharaman on Saturday also announced that electricity distribution companies in Union Territories (UTs) will be privatised. A tariff policy that does not burden consumers with distribution companies’ inefficiencies will be guaranteed, she said while presenting the fourth tranche of the economic stimulus package.

She also announced a hike in viability gap funding (VGF) for development of social infrastructure. In her fourth tranche of economic stimulus, she said ₹8,100 crore will be provided as viability gap funding for development of social infrastructure.

The finance minister said social infrastructure projects suffer from poor viability. Therefore, the government will enhance the quantum of viability gap funding up to 30 per cent each of the total project cost as VGF by central and state/statutory bodies. For other sectors, existing VGF support of 20 per cent each from the government of India and state/statutory bodies shall continue.

For boosting private participation in space activities, the Centre will provide a level playing field for private companies in satellites, launches and space-based services.

Also, the government will provide predictable policy and regulatory environment to private players, she said. The move ensures giving the private sector a role in India’s space programme, including in satellites, launches and space-based services.

Future projects for India’s space programme and planetary exploration and outer space travel would be open for the private sector, the finance minister said, adding liberal geo-spatial data policy will provide remote-sensing data to tech-entrepreneurs in the country.

This is the fourth phase of announcements by the Union Finance Ministry elaborating on the Centre’s ₹20 lakh crore economic stimulus package.

Over the last few days, Sitharaman has been convening daily media briefings to put forth Prime Minister Narendra Modi’s vision and share more details on the economic package meant to revive the industry grappling with a 54-day nationwide lockdown. The lockdown had been imposed towards the end of March to contain the spread of the Covid-19 pandemic.