Sectoral Reforms Under Atmanirbhar Bharat
On 16th May 2020 Finance Minister Nirmala Sitharaman announced the fourth tranche of the economic stimulus package pertaining to a Rs 20 lakh crore economic package under the Atmanirbhar Bharat vision. She said that there will be various structural reforms that will aim towards boosting the economy and creating jobs in India.
To fast-track the investments in focus sectors in India, following policy reforms have been announced under Atmanirbhar Bharat:
To increase the self-reliance in coal production, the Government will introduce competition, transparency, and private sector participation in the sector through revenue sharing mechanism instead of fixed Rupee/tonne regime and liberalizing the entry norms. Further to this, any party would be able to bid for coal block and sell in an open market. Exploration-cum-production regime for partially explored blocks will be introduced in the sector to facilitate the auction of partially explored blocks. Coal Gasification / Liquefication will be incentivized through rebate in revenue share. The government of India will undertake Infrastructure development measures of Rs. 50,000 crores under the sector. For further liberalizing the regime under the coal sector, Coal Bed Methane (CBM) extraction rights will be auctioned from Coal India Limited’s (CIL) coal mines along with EoDB measures such as simplification of the mining plan.
To enhance the private investments in the coal sector, structural reforms will be undertaken to boost growth, employment and bring state-of-the-art technology, especially in exploration. The seamless composite exploration-cum-mining-cum-production regime will be introduced along with an open and transparent auction of around 500 mining blocks. The distinction between captive and noncaptive mines will be removed to allow the transfer of mining leases and sale of surplus unused minerals, leading to better efficiency in mining and production. Further, the Ministry of Mines will be developing Mineral Index for different minerals and undertaking rationalization of stamp duty payable at the time of award of mining leases.
To promote self-reliance in Defence Production, a list of weapons/platforms to be notified for a ban on import with year-wise timelines and Separate budget provisioning will be undertaken for domestic capital procurement. Further, FDI limit in the defense manufacturing under automatic route will be raised from 49% to 74%. To promote the time-bound defense procurement process and faster decision making, Project Management Unit (PMU) to support contract management will be set up.
For efficient airspace management for the civil aviation sector, restrictions on utilization of the Indian Air Space will be eased so that civilian flying becomes more efficient. This in turn will bring a total benefit of about Rs 1000 crores per year for the aviation sector. For the development of world-class airports through PPP, AAI has awarded 3 airports out of 6 bids for Operation and Maintenance on Public-Private Partnership (PPP) basis. Further to this, 6 airports have been identified for second round and third of bidding expected around investment of around Rs. 13,000 crores. To become a global hub for Aircraft Maintenance, Repair, and Overhaul (MRO), Tax regime for MRO ecosystem has been rationalized. Aircraft component repairs and airframe maintenance to increase from Rs 800 crores to Rs 2000 crores in three years and convergence between defense sector and the civil MROs will be established to create economies of scale in the sector.
For the power sector, a tariff policy will be released with reforms aiming to protect consumer rights, promote industry, and establish the sustainability of the sector. Further, Power Departments / Utilities in Union Territories will be privatized to improve the performance of power distribution & supply.
To boost private participation in Space activities, level playing field for private companies will be provided in satellites, launches, and space-based services. Further, the private sector will be allowed to use ISRO facilities and explore planetary exploration, outer space travel etc. Geospatial data policy will be liberalized for providing remote-sensing data to tech-entrepreneurs.
For Atomic energy, research reactor will be established in PPP mode for production of medical isotopes. Further, facilities in PPP mode will be undertaken to use irradiation technology for food preservation. To facilitate, 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.
To boost the private sector investment in the Social Infrastructure sector, the Government will enhance the quantum of Viability Gap Funding (VGF) up to 30% each of Total Project Cost as VGF by Centre and State/Statutory Bodies. For other sectors, VGF existing support of 20 % each from the Government of India and States/Statutory Bodies shall continue. Total outlay earmarked for this is Rs. 8100 crores.
Another key announcement by the Finance Minister was the scheme for the up-gradation of Industrial Infrastructure. The scheme will be implemented in States through Challenge mode for Industrial Cluster Upgradation of common infrastructure facilities and connectivity. According to Smt. Nirmala Sitharaman, availability of industrial land/land bank for promoting new investments and making information available on industrial information system (IIS) will be done with GIS mapping. She also highlighted that some 3,376 industrial parks/estates/SEZs in 5 lakh hectares are mapped on the Industrial Information System (IIS). All industrial parks will be ranked in fiscal 2020-21.
MSME body Federation of Indian Micro and Small & Medium Enterprises (FISME) in its budget recommendations to the Finance Minister had urged for developing industrial space for small businesses that can be offered at affordable rates. The affordable industrial space is a long-pending demand of industries.
The government also has plans to boost private sector investment in Social Infrastructure through a revamped Viability Gap Funding Scheme. Social Infrastructure Projects typically suffer from poor viability. The government plans to enhance the quantum of Viability Gap Funding up to 30% each of Total Project Cost as VGF by Centre and State/Statutory Bodies. For other sectors, existing VGF support of 20 percent each from the Centre and states shall continue. The total outlay is Rs 8,100 crore. These projects will be proposed by Union Ministers and state governments or statutory entities.
