Amidst pressures to reboot economy, FM sets the stage for next wave of reforms

Amidst the continued nationwide lockdown, the Finance Minister(FM) Nirmala Sitharaman announced the final two tranches of stimulus measures, as part of the Rs 20 lakh crore comprehensive Special economic package brought out by PM Modi. Reiterating the commitment towards boosting growth in various sectors of the economy, the FM announced a series of policy reforms in her efforts towards achieving ‘Aatma Nirbhar Bharat (Self-reliant India) and these also included the introduction of an upcoming ranking of states on the basis of investment attractiveness in their efforts towards competing to attract new investments.

Sitharaman said, “Through Empowered Group of Secretaries, fast track clearance is in process and for this purpose  each ministry will have a Project Development Cell with the aim to prepare investable projects, besides coordinating with central governments, state governments and the investors.” The FM altogether announced measures to re-energise the overall industrial segments including Minerals, Coal, Civil Aviation, Defence Production, Social Infrastructure, Power Sector, Atomic Energy and Space.

Among various structural reforms oriented measures announced by the FM the following have garnered sizeable attention:

1. Coal Sector: Commercial mining has been introduced in the Coal sector as now the private sector has been allowed to participate in exploration, while the coal blocks which have been explored partially will witness exploration-cum-production regime. With the aim to assist Indian to achieve gas-based economy coal liquefication, or gasification will be incentivised through rebate in revenue-share. One billion tons of coal production from private blocks are targeted to be achieved from private blocks by 2023-24 and for this purpose infrastructure development of Rs 50,000 crore will be done.
2. Mineral Sector: In the mineral sector as well, private investments will be enhanced and structural reforms will be introduced to boost growth, employment and to bring state-of-the-art technology in exploration through the introduction of seamless composite exploration to mining to production regime.
3. Defence Sector: To enhance self-reliance in the defence sector, Make in India will be promoted and it will also help reduce the huge defence import bill. And FDI limit in defence manufacturing will be raised from 49% to 74% under the automatic route.
4. Civil Aviation Sector: To ease and make civilian flying more efficient restrictions on utilisation of the Indian Air Space will be eased. The initiative will bring about Rs 1,000 per year of total benefit for the aviation sector, besides leading to optimal utilization of airspace. More airports will be created through the PPP model. India will be transformed into a hub for aircraft maintenance, overhaul and repair on a global scale.
5. Power Sector: Reforms will be introduced in the power sector like consumers’ rights will be strengthened. The inefficiencies of DISCOM won’t burden the consumers and there will be standards of service and associated penalties for DISCOMs and the DISCOMs and load-shedding will be penalized. To promote the industry, there will be a progressive reduction in cross-subsidies and power departments and utilities in union territories will be privatised to provide better services to consumers and the overall improvement of distribution.
6. Space Activities: Steps to be taken to boost private sector participation in space activities and the private companies shall be provided level playing field and predictable policy and regulatory environment. The private sector will be allowed to use ISRO facilities.
7. Atomic Energy: Start-up ecosystem to be linked with the nuclear sector and technology development cum incubation centres to be set up for fostering synergy between research facilities and tech-entrepreneurs.

Further, the finance minister also announced a series of government reforms to enable a few more sectors of the economy under the ambitious Aatma Nirbhar Bharat Abhiyaan. These included an additional Rs 40,000 crore for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) to help generate more work and to create livelihood assets in larger number, providing about 300 crore person-days; increase in public expenditure on health and ramping up health and wellness facilities in both urban and rural areas; setting up hospital blocks for infectious diseases; encouraging research through ICMR under National Digital Health Mission; enhancement of ease of doing business; technology-driven PM eViDYA programme; increase in borrowing limits of states; policy for self-reliant India, etc. Apart from all these, the department of expenditure will also notify a specific scheme—and altogether all these stimulus measures will help drive the country towards Aatma Nirbhar Bharat.