The FM has come out with the Fourth part of stimulus package “Atma Nirbhar Bharat” out of 20 lakh crores announced by PM Narendra Modi yesterday in his address to the nation.
Atma Nirbhar Bharat – Part 4 of the 20L Crore Economic Stimulus Package
Today’s announcements :
Just before today’s press conference by FM, a statement made by SBI Chief is worth noting.
“One thing that is becoming clear from the pronouncement of WHO and other agencies is that the World will have to learn to live with Covid-19 and economic activity cannot be kept under lockdown for a long period.”
– SBI chief Rajnish Kumar
Finance Minister Nirmala Sitharaman began the fourth tranche of announcement related to the economic package by saying that the government is trying to give little assistance to the people so that they don’t suffer in this unfortunate time.
She also clarified that Atma Nirbhar Bharat is not about making India isolated and that PM Modi’s goal of self-reliant India is to prepare the country for tough competition and face challenges of global value chains.
“GST, DBT, IBC, Ease of Doing Business, PSU banks reforms, and the direct tax changes, UDAY scheme have been landmark reforms.” – FM Sitharaman
“Today’s announcement to be focussed on structural reforms in the sectors that are going to be the new horizon for growth, more investment can be drawn, more production can be clearly marked, and certainly more employment opportunities can be generated in these sectors.” – FM Sitharaman
Structural reforms are focus of today’s announcement which she began by saying that there is a need to simplify rules in certain sectors.
- Policy reforms for fast track Investment
- Fast tracking investment clearances through EGoS
- Special cell for seamless approvals in each ministry
- Ranking of States on investment attractiveness
- Incentive schemes for promotion of champion sectors such as Solar PV, Advanced cell storage etc
- Upgradation of industrial infrastructure
- Availability of land and land bank for industries and making information available online on IIS with GIS mapping
- 3376 industrial parks/ SEZs mapped on IIS
All industrial parks will be ranked by 2020-21
Policy Reforms in 8 Sectors targeted by GoI
- State monopoly goes
- Pvt Players to be allowed
- Entry norms to be liberalised
- Introduce revenue sharing instead of fixed price/ tonne
- Nearly 50 blocks to be offered
- No eligibility conditions
- Only upfront payment with a ceiling
- Any party can bid
- Exploration-cum-production regime for partially explored blocks
- Private sector participation in exploration
- Incentivise production before schedule through rebate in revenue share
- Coal Gasification/Liquefaction will be incentivised through rebate in revenue share
- To help significantly lower environment impact.
- To assist India in switching to gas based economy.
- Rs 50,000 crore allotted for creating evacuation infrastructure for coal.
- Coal Based Methane (CBM) extraction rights to be auctioned by CIL
- Mining plan simplification as a measure of Ease of Doing Business
- Concessions in commercial terms given to CIL’s consumers worth Rs 5000 crores
- Enhancing private investment in the Mineral sector
- Introduction of seamless composite exploration-cum-mining-production regime
- 500 mining blocks to be offered.
- Joint auction of bauxite and coal blocks to benefit aluminium industry
- Distinction between captive, non-captive mines removed to allow transfer of mining rights
- A mineral index is being developed by ministry of mines
- Stamp duty to be rationalised.
- Defence Production
- Make in India push for self reliance Indigenisation of imported spares.
- List of weapons/platforms to be notified for import ban.
- Separate budget for procurement.
- Improve autonomy, accountability in ordnance by Corporatisation of Ordnance Factory Board.
- FDI limit raised from 49% to 74%.
- Time-bound defence procurement process
Reduction in Flying cost Rs. 1000 crores – Efficient Airspace Management for Civil Aviation
- Optimal utilisation of airspace will help in reduction of fuel consumption and time. Currently only 60% of airspace is available.
- 6 more airports up for auction for 2nd round
- Pvt Players get investment in 12 airports expected around Rs 13,000 cr
- 6 more airports to be identified for 3rd round
- Rationalising air space to reduce flying time, save fuel
- Air space curbs to be removed
- Green efforts to be boosted.
- Promote hub for MRO (Aircraft Maintenance, Repair and Overhaul) in India
- Rationalisation of tax regime for MRO ecosystem
- Major engine manufacturers to setup repair facilities in India
Move to reduce flying cost by convergence of defence and civil MROs to be established to save money on maintenance
- Reforms to Power sector for Discoms
- Power distribution companies in Union Territories will be privatised.
- Tariff will be applicable according to the government’s guidelines.
- You won’t have to suffer for Discom inefficiencies.
- Discoms to face penal action for load-shedding
- Discom functions to be streamlined to improve accountability.
- Progressive reduction in cross subsidies
- Generation and Transmission project developers to be selected competitively
- Timely payments for Gencos
- DBT for subsidy : smart prepaid meters
- Government increases viability gap funding in social infrastructure
- Rs 8,100 crore outlay for viability gap funding in social infrastructure, by increasing the quantum from 20% to 30% of total project cost.
- Private participation in Space sector
- Pvt Sector gets co-pilot seat in space sector.
- Regulatory ease to be extended to firms.
- Pvt firms can use ISRO facilities.
- Space exploration opened for Pvt Players.
- Liberal geo-spatial data policy for providing remote-sensing data to tech entrepreneurs.
Takeaway: Startups get one more field of play
- Atomic energy reforms
- Research reactor to be done in PPP mode (for medical isotopes).
- PPP mode facility for irradiation tech for food.
- Start-up ecosystem to be linked with nuclear sector.
The 4th part of the stimulus is focused on opening up the conservative sectors for private sector participation. Private sector investment in these sectors will augment self-reliance by reducing import of these goods and services. This will not only help savings in terms of cost reduction but will also be able to save convertible foreign exchange which is very crucial at this phase of economic slowdown. This will also create more employment opportunities. However majority of these steps will be beneficial in medium term and it will be interesting see how much it can actually help in recovering the Indian economy in terms of GDP.
Stay tuned for further stimulus package being announced by the FM.