Reforms concerning various sectors of economy announced
Part of: GS Prelims and GS-III – Economy
- Recently more reforms concerning various sectors of economy were announced by the Indian Finance Minister.
- Private involvement to be brought into certain areas through PPP mode.
- Research reactor to be set up in PPP mode for production of medical isotopes which can be used for treatment of cancer and other diseases.
- Irradiation technology facilities for food preservation to be set up in PPP mode, to assist farmers.
- Indian start-ups and tech entrepreneurs will be linked up with nuclear research facilities through tech development-cum-incubation centres.
- Central government will allow private sector to use ISRO facilities.
- Future projects related to space will be open to the private sector.
- Geo-spatial data policy will be eased to make remote-sensing data more widely available with proper safeguards.
Power distribution companies (Discoms)
- Discoms in union territories shall be privatised.
- Tariff policy reforms will be introduced to protect consumer rights.
- Load shedding will be penalised.
- There will be a progressive reduction in cross subsidies (a subsidy granted to a business or activity out of the profits of another business or activity).
- Smart prepaid meters will be set up.
- Subsidies will be paid by direct benefit transfer.
- Restrictions will be eased to make civilian flying faster and more efficient.
- Six more airports are up for auction on PPP basis by Airports Authority of India.
- Additional investment by private players to be invited in 12 airports.
- To make India a global hub for aircraft maintenance, report and overhaul (MRO) hub, the tax regime for MRO ecosystem will be rationalised.
- This will save maintenance cost for airlines, allow convergence between defence and civil aviation MROs.
- The target is to grow MRO market in the country from Rs. 800 crore to Rs. 2000 crore over three years.
Ordnance Factory Boards
- They are being corporatised to improve professional management, transparency and accountability.
- They will be listed on the stock market but they will not be privatised.
- FDI limit in defence manufacturing under automatic route will be raised from 49% to 74%.
- A list of weapons and platforms which will not be allowed for import will be announced.
- They will have to be bought in India.
- Every year, this list will be increased as capacity to make weapons that meet necessary standards grows.
- Indigenisation of some imported spares will also be given priority.
- There will be separate budget provision for domestic capital procurement.
- This will help reduce defence import bill and also encourage domestic manufacturing.
Composite regime for minerals
- Under the regime, 500 mining blocks will be offered through an open and transparent auction process.
- Bauxite and coal blocks will be auctioned jointly.
- Distinction between captive and non-captive mines will be removed to allow transfer of mining leases and sale of surplus unused mineral blocks.
Reforms in coal sector
- Any private player can bid for a coal block and sell it in the open market.
- Earlier, only captive consumers with end-use ownership could bid for coal blocks.
- Almost 50 blocks will be offered immediately.
- Incentive to convert coal into gas in order to meet environmental needs shall also be provided.
- Coal bed methane extraction will be done through auction.
- Infrastructure development financing of Rs. 50,000 crore will be provided to support 1 billion tonnes of coal from Coal India by 2023-24, plus coal from private blocks.
- Revenue sharing mechanism will be allowed for more coal availability at competitive market prices.
Empowered Group of Secretaries
- Fast track clearances shall be done through an Empowered Group of Secretaries.
- Incentive schemes to promote new champion sectors shall be introduced.
- Schemes will also be implemented in States through challenge mode to upgrade infrastructure facilities, connectivity in industrial clusters and to make available land for new investments.
- An additional ₹40,000 crore shall be allocated to MGNREGS in addition to the budget estimate of ₹61,000 crore to ensure that workers returning to villages are provided employment, especially in the upcoming monsoon period.
- Public expenditure on health will be increased.
- Investments in grassroots health institutions and wellness centres in rural and urban areas will be increased too.
- All districts shall have infectious diseases blocks which will be set up in their hospitals.
- Public health labs will be set up in every block.
- Top 100 universities will be automatically allowed to start online classes from May 30, 2020.
- The PM e-vidya programme for multi-mode access to digital education will be launched.
- DIKSHA digital platform will provide e-content and QR coded textbooks for all classes for school education across the country.
- One earmarked TV channel for each class. There will be extensive use of radio, community radio and podcasts.
- Special e-content for visually and hearing impaired children.
- In an attempt to give relief to companies defaulting on loans due to the COVID-19 stress, no fresh insolvency will be initiated for one year under the Insolvency and Bankruptcy Code.
- Coronavirus-related debt will be excluded from definition of default.
- Minimum threshold to initiate insolvency proceedings has been raised to ₹1 crore from ₹1 lakh to benefit MSMEs.
- An ordinance will be promulgated to bring this change in IBC.
- Decriminalisation of the Companies Act in violations involving minor technical and procedural defaults such as – shortcoming in CSR reporting, filing defaults, delay in holding AGM, etc.
- Majority of the compoundable offences sections will be shifted to internal adjudication mechanism (IAM).
- Amendments will be brought through an Ordinance to de-clog the criminal courts and NCLT.
- Companies will be permitted to directly list their securities in permissible foreign jurisdictions.
Public sector policy
- A new coherent public sector enterprises policy will be formulated to define strategic sectors which will have not more than four PSUs.
- In sectors notified as strategic, at least one public sector enterprise will still be present but private sector will be allowed too.
- In other sectors, public sector enterprises will be privatised.
- This is being done to minimise wasteful administrative costs.
Support to the states
- The States’ borrowing limits will be raised from 3% to 5% of State GDP.
- This increase in borrowing limits is conditional which will be linked to specific reforms such as ‘One Nation, One Ration Card’, ease of doing business, power distribution issues and urban local body revenue.
- The first 0.5% increase from 3% to 3.5% shall be unconditional.
Important value additions:
- It means the mining which is taken out by a company for its own use & it won’t be able to sell it in the market.
Coalbed methane extraction (CBM extraction)
- It is a method for extracting methane from a coal deposit.
- It is a somewhat flexible concept.
- It involves sharing operating profits or losses among associated financial actors.
- It can exist as a profit-sharing system that ensures each entity is compensated for its efforts.