* Bold reforms to boost sagging economy
NEW DELHI, May 16: In bold reforms aimed at boosting sagging economy, the Government today announced an easing of limits on Foreign Direct Investment in defence manufacturing, privatisation of six more airports, opening up of more air space and allowing private sector in commercial coal mining.
Also, the list of weapons that cannot be imported will be expanded to give Make in India a boost.
The private sector will also be involved in the Indian space programme including in future projects for planetary exploration and outer space travel as well as satellite launches.
Announcing the fourth tranche of the economic stimulus package that largely dealt with reforms and almost negligible new investment, Finance Minister Nirmala Sitharaman said foreign investors would be allowed to own up to a 74 per cent stake in defence manufacturing ventures under the automatic route, up from the current 49 per cent limit.
This would be subject to security clearance norms, she said.
Also, the Government will expand the list of weapons/platforms banned for imports with year-wise timelines and indigenisation of some imported spares. This, she said, would boost domestic manufacturing and cut huge defence import bill.
To improve autonomy, accountability, and efficiency in ordnance supplies, the Government will Corporatise Ordnance Factory Board, which will ultimately lead to listing on domestic stock exchanges.
“Corporatisation is not privatisation,” she said.
Finance Minister said six more airports will be bid out for operation and maintenance on public-private partnership (PPP) basis. Also, additional investment by private players in 12 airports bid out in the first two rounds is expected to be around Rs 13,000 crore.
She said more air space will be opened for civil aviation, helping airlines save Rs 1,000 crore in flying cost through reduced flying time and lower fuel consumption.
Currently, only 60 per cent of the Indian airspace is freely available.
Restrictions on the utilisation of the Indian air space will be eased in consultation with the defence so that civilian flying becomes more efficient, she said.
Steps would also be taken to make the country a hub for Maintenance, Repair, and Overhaul (MRO) of aircraft, she said adding a tax on MRO operations had already been cut in March.
For the coal sector, she announced allowing the private sector in commercial mining as well as auction of even partially explored coal blocks.
Also, turning coal into liquid or gaseous fuel will be incentivised while rights to exploit of gas lying below coal bed (CBM) in blocks owned by state-owned Coal India Ltd (CIL) will be auctioned.
Production earlier-than-scheduled will be incentivized through rebate in revenue share.
An investment of Rs 50,000 crore is envisaged in coal evacuation infrastructure to help meet CIL’s target of 1 billion tonnes of production by 2023-24.
Sitharaman announced structural reforms in the mining of minerals through the introduction of a seamless composite exploration-cum-mining-cum-production regime under which 500 mining blocks would be auctioned.
Also, a joint auction of bauxite and coal mineral blocks would be done to enhance the aluminum industry’s competitiveness by reducing the cost of electricity generation.
The Government will also remove the distinction between captive and non-captive mines to allow the transfer of mining leases and the sale of surplus unused minerals, leading to better efficiency in mining and production.
For the electricity sector, the Finance Minister said a tariff policy laying out consumer rights such as inefficiencies of distribution companies not burdening consumers and penalising load-shedding is on the anvil.
The policy would also promote the progressive reduction in cross-subsidies, a time-bound grant of open access, timely payment to generating companies and DBT for subsidy.
Also, electricity distribution in Union Territories will be privatised, she said.
For boosting private sector investment in social infrastructure, a Rs 8,100 crore revamped Viability Gap Funding Scheme will be launched by raising the share of Government funds in such projects to 30 per cent from the current 20 per cent.
Sitharaman said for boosting private participation in space activities, the government will provide a level playing field for private companies in satellites, launches and space-based services.
The 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 will be open for the private sector,” she said.
In atomic energy, a research reactor in PPP mode for the production of medical isotopes that can be used for affordable treatment for cancer and other diseases will be established.
Earlier this week, Prime Minister Narendra Modi announced a cumulative package of Rs 20 lakh crore, nearly 10 per cent of the GDP, to provide relief to an economy battered by the Coronavirus lockdown imposed since March 25.
While this included March 27 announcement of Rs 1.7 lakh crore package of free foodgrains and cash to poor for three months and RBI’s Rs 5.6 lakh crore worth of monetary policy since March, the Government in three tranches over the last three days announced a cumulative package of Rs 10.73 lakh crore.
The measures announced have largely been about liquidity with negligible extra budget spending.
These provided for a variety of steps for small businesses, street vendors, farmers, and poor migrants as well as shadow banks and electricity distributors, but they have largely been either credit guarantee schemes or new fund creations to be shouldered by banks and financial institutions.
The government cash outgo is limited to a maximum of Rs 18,500 crore on free foodgrain and affordable housing to migrant workers as well as limited tax relief and marginal dole to some companies on employee retiral benefits.
Highlights
Following are the highlights of the fourth tranche of the Rs 20 lakh crore comprehensive economic package announced by Finance Minister Nirmala Sitharaman to tide over the COVID-19 crisis:
Defence:
* FDI in defence manufacturing to be hiked to 74 per cent from 49 per cent under automatic route * Govt to notify a list of weapons/platforms banned for imports, such items can only be purchased from India * To promote indigenisation of imported spares, focus on lowering defence import bill * Separate budget provisioning for domestic capital procurement * Faster decision making in defence procurement * Govt to corporatise Ordnance Factory Board
Civil Aviation:
* Restrictions on utilisation of the Indian air space to be eased for increasing efficiency of passenger aircraft, to cut fuel usage and time * To rake in Rs 1,000 crore per year benefit for the aviation sector * 6 more airports to be privatised
* India to become a global hub for Aircraft Maintenance, Repair and Overhaul (MRO), tax rates rationalised
Coal and mineral:
* To introduce commercial mining in coal sector * Entry norms to be liberalized, nearly 50 blocks to be offered immediately * Coal Gasification / Liquefication to be incentivised through rebate in revenue share * Rs 50,000 crore earmarked for infrastructure development in coal sector * Coal Bed Methane (CBM) extraction rights to be auctioned from Coal India’s mines * To introduce seamless composite exploration-cum-mining-cum-production
Regime in minerals sector, 500 mining blocks to be auctioned * Introduce joint auction of bauxite and coal mineral blocks * To rationalise stamp duty payable at the time of award of mining leases
Power Distribution:
* To bring out reform in tariff policy, privatise Discoms in Union Territories
Social Infrastructure:
* Govt’s share in viability gap funding for development of social infrastructure, including hospitals, hiked to 30 per cent from 20 per cent, total outlay Rs 8,100 crore
Space:
* To allow private sector 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
Atomic Energy:
* To set up a research reactor in PPP mode for the production of medical isotopes to help make available affordable treatment for cancer and other diseases * Establish facilities in PPP mode to use irradiation technology for food preservation – to complement agricultural reforms and assist farmers. (PTI)
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