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Editorial Articles


Volume-2, 23-29, May 2020

Additional Allocation to Generate Employment, Boost Agriculture

Hon'ble Prime Minister Shri Narendra Modi has announced a Special economic and comprehensive package of Rs 20 lakh crore - equivalent to 10% of India's GDPon 12th May 2020. He gave a clarion call for आत्मनिर्भर भारत or Self Reliant India Movement. He also outlined five pillars of Atmanirbhar Bharat Economy, Infrastructure, System, Vibrant Demography and Demand. In her opening remarks during the 5th Press Conference on 17 May 2020 on stimulus package to fight COVID-19 under Aatma Nirbhar Bharat Abhiyaan, the Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman referred to the vision laid out by Prime Minister Shri Narendra Modi in his address to the Nation on 12th May 2020. Quoting the Prime Minister, Smt. Sitharaman said that as a Nation, we stand at a very crucial juncture. COVID-19 Pandemic has brought a message and an opportunity. We need now to build an Aatma Nirbhar Bharat. Smt. Sitharaman said that in order to prove the resolve of Aatma Nirbhar Bharat, land, labour, liquidity and laws have all been emphasised in Aatma Nirbhar Bharat Package. The crisis and the challenge is an opportunity to build a self-reliant India. The Finance Minister said this announcement is in continuation in the series of reforms. Soon after lockdown, we came up with Prime Minister Garib Kalyan Package (PMGKP). As part of the Rs 1.70 lakh crore PMGKP, the Government announced distribution of free food grains, cash payment to women and poor senior citizens and farmers etc. The swift implementation of the package is being continuously monitored. Around 41 crore poor people received financial assistance of Rs 52,608 crore under the PMGKP. The Finance Minister also said PMGKP used technology to do Direct Benefit Transfer (DBT) to people. We could do what we did because of the initiatives taken during the last few years, she added. In addition, 84 lakh metric tonnes of food grains has been lifted by States and also more than 3.5 lakh metric tonnes of pulses has been dispatched to various States. And for this, Smt. Sitharaman appreciated the concerted efforts of FCI, NAFED and States, giving pulses and grains in huge quantities, despite logistical challenges. Announcing the 5th and last Tranche of measures towards Government Reforms and Enablers, Smt. Sitharaman detailed seven measures for providing employment, support to businesses, Ease of Doing Business, and State Governments as well sectors such as Education and Health.

  1. Rs 40,000 crore increase in allocation for MGNREGS to provide employment boost

    The Government will now allocate an additional Rs 40,000 crore under MGNREGS. It will help generate nearly 300 crore person days in total addressing need for more work including returning migrant workers in Monsoon season as well. Creation of larger number of durable and livelihood assets including water conservation assets will boost the rural economy through higher production.

  2. Health Reforms & Initiatives

    Public Expenditure on Health will be increased by investing in grass root health institutions and ramping up Health and Wellness Centers in rural and urban areas. Setting up of Infectious Diseases Hospital Blocks in all districts and strengthening of lab network and surveillance by Integrated Public Health Labs in all districts & block level Labs & Public Health Unit to manage pandemics. Further, National Institutional Platform for One health by ICMR will encourage research. And implementation of National Digital Health Blueprint under the National Digital Health Mission.

  3. Technology Driven Education with Equity post COVID

    PM eVIDYA, a programme for multi-mode access to digital/ online education to be launched immediately. Manodarpan, an initiative for psycho-social support for students, teachers and families for mental health and emotional well-being to be launched immediately as well. New National Curriculum and Pedagogical framework for school, early childhood and teachers will also be launched. National Foundational Literacy and Numeracy Mission for ensuring that every child attains Learning levels and outcomes in grade 5 by 2025 will be launched by December 2020.

  4. Further enhancement of Ease of Doing Business through IBC related measures Minimum threshold to initiate insolvency proceedings has been raised to Rs. 1 crore (from Rs. 1 lakh, which largely insulates MSMEs). Special insolvency resolution framework for MSMEs under Section 240A of the Code will be notified soon. Suspension of fresh initiation of insolvency proceedings up to one year, depending upon the pandemic situation. Empowering Central Government to exclude COVID 19 related debt from the definition of "default" under the Code for the purpose of triggering insolvency proceedings.

  5. Decriminalisation of Companies Act defaults

    Decriminalisation of Companies Act violations involving minor technical and procedural defaults such as shortcomings in CSR reporting, inadequacies in Board report, filing defaults, delay in holding of AGM. The Amendments will de-clog the criminal courts and NCLT. 7 compoundable offences altogether dropped and 5 to be dealt with under alternative framework.

  6. Ease of Doing Business for Corporates Key reforms include:
  • Direct listing of securities by Indian public companies in permissible foreign jurisdictions.
  • Private companies which list NCDs on stock exchanges not to be regarded as listed companies. 
  • Including the provisions of Part IXA (Producer Companies) of Companies Act, 1956 in Companies Act, 2013. 
  • Power to create additional/ specialized benches for NCLAT 
  • Lower penalties for all defaults for Small Companies, One-person Companies, Producer Companies & Start Ups.
  1. Public Sector Enterprise Policy for a New, Self-reliant

          India Government will announce a new policy whereby

  • List of strategic sectors requiring presence of PSEs in public interest will be notified
  • In strategic sectors, at least one enterprise will remain in the public sector but private sector will also be allowed Š
  • In other sectors, PSEs will be privatized (timing to be based on feasibility etc.) Š
  • To minimise wasteful administrative costs, number of enterprises in strategic sectors will ordinarily be only one to four; others will be privatised/ merged/ brought under holding companies.

 

  1. Support to State Governments

Centre has decided to increase borrowing limits of States from 3% to 5% for 202021 only. This will give States extra resources of Rs. 4.28 lakh crore. Part of the borrowing will be linked to specific reforms (including recommendations of the Finance Commission). Reform linkage will be in four areas: universalisation of 'One Nation One Ration card', Ease of Doing Business, Power distribution and Urban Local Body revenues. A specific scheme will be notified by Department of Expenditure on the following pattern: Š

  • Unconditional increase of 0.50% Š
  • 1% in 4 tranches of 0.25%, with each tranche linked to clearly specified, measurable and feasible reform actions
  • Further 0.50% if milestones are achieved in at least three out of four reform areas The Finance Minister concluded by providing a breakup of the stimulus measures provided so far in order to become Aatma Nirbhar Bharat.

The Finance Minister earlier announced following policy reforms to fast track investment in an effort towards Aatma Nirbhar Bharat:

  1. There will be fast tracking of investment clearance through Empowered Group of Secretaries.
  2. Project Development Cell will be constituted in each Ministry to prepare investible projects, coordinate with investors and Central/State Governments.
  3. There will be ranking of States on investment attractiveness to compete for new investment.
  4. Incentive schemes for promotion of new champion sectors will be launched in sectors such as solar PV manufacturing; advanced cell battery storage etc. Smt. Sitharaman also announced that a scheme will be implemented in States through challenge mode for Industrial Cluster Upgradation of common infrastructure facilities and connectivity. There will be availability of industrial land/land banks for promoting new investments and making information available on Industrial Information System (IIS) with GIS mapping. 3376 Industrial Parks/ Estates/SEZs in five lakh hectares are mapped on IIS. All Industrial Parks will be ranked during 2020-21. The Finance Minister today announced the following structural reforms in the eight sectors of Coal, Minerals, Defence production, Civil Aviation, Power Sector, Social Infrastructure, Space and Atomic energy. The details are as follows:

 

  1. COAL SECTOR
  2. Introduction of Commercial Mining in Coal Sector

The Government will introduce competition, transparency and private sector participation in the Coal Sector through:

  1. A revenue sharing mechanism instead of regime of fixed Rupee/tonne. Any party can bid for a coal block and sell in the open market.
  2. Entry norms will be liberalised. Nearly 50 Blocks will be offered immediately. There will not be any eligibility conditions, only upfront payment with a ceiling will be provided.
  3. There will be explorationcum-production regime for partially explored blocks against earlier provision of auction of fully explored coal blocks. This will allow private sector participation in exploration.
  4. Production earlier than scheduled will be incentivized through rebate in revenueshare.

 

  1. Diversified Opportunities in Coal Sector
  2. Coal Gasification / Liquefication will be incentivised through rebate in revenue share. This will result in significantly lower environment impact and also assist India in switching to a gas-based economy.
  3. Infrastructure development of Rs. 50,000 crore will be done for evacuation of enhanced Coal India Limited's (CIL) target of 1 billion tons coal production by 2023-24 plus coal production from private blocks. This will include Rs 18,000 crore worth of investment in mechanised transfer of coal (conveyor belts) from mines to railway sidings. This measure will also help reduce environmental impact.

 

  1. Liberalised Regime in Coal Sector
  2. Coal Bed Methane (CBM) extraction rights will be auctioned from Coal India Limited's (CIL) coal mines.
  3. Ease of Doing Business measures, such as Mining Plan simplification, will be taken. This will allow for automatic 40% increase in annual production.
  4. Concessions in commercial terms given to CIL's consumers (relief worth Rs 5,000 crore offered). Reserve price in auctions for nonpower consumers reduced, credit terms eased, and lifting period has been enhanced.

 

  1. MINERAL SECTOR
  2. Enhancing Private Investments in the Mineral Sector

There will be structural reforms to boost growth, employment and bring state-ofthe-art technology especially in exploration through:

  1. Introduction of a seamless composite exploration-cummining-cum-production regime.
  2. 500 mining blocks would be offered through an open and transparent auction process.
  3. Joint Auction of Bauxite and Coal mineral blocks to enhance Aluminum Industry's competitiveness will be introduced to help Aluminum industry reduce electricity costs.

 

  1. Policy reforms in Mineral Sector

The distinction between captive and non-captive mines to allow transfer of mining leases and sale of surplus unused minerals, leading to better efficiency in mining and production shall be removed. Ministry of Mines is in the process of developing a Mineral Index for different minerals. There will be rationalisation of stamp duty payable at the time of award of mining leases.

 

  1. DEFENCE SECTOR
  2. Enhancing Self Reliance in Defence Production
  3. 'Make in India' for SelfReliance in Defence Production will be promoted by notifying a list of weapons/platforms for ban on import with year wise timelines, Indigenisation of imported spares, and separate budget provisioning for domestic capital procurement. This will help reduce huge Defence import bill.
  4. Improve autonomy, accountability and efficiency in Ordnance Supplies by Corporatisation of Ordnance Factory Board.

 

  1. Policy Reforms in Defence Production
  2. FDI limit in the Defence manufacturing under automatic route will be raised from 49% to 74%.
  3. There will be time-bound defence procurement process and faster decision making will be ushered in by setting up of a Project Management Unit (PMU) to support contract management; Realistic setting of General Staff Qualitative Requirements (GSQRs) of weapons/ platforms and overhauling Trial and Testing procedures.

 

  1. CIVILAVIATION SECTOR
  2. Efficient Airspace Management for Civil Aviation

Restrictions on utilisation of the Indian Air Space will be eased so that civilian flying becomes more efficient. This will bring a total benefit of about Rs 1,000 crore per year for the aviation sector. This will lead to optimal utilization of airspace; reduction in fuel use, time and will have positive environmental impact.

  1. More World-Class Airports through PPP

6 more airports have been identified for 2nd round bidding for Operation and Maintenance on Public-Private Partnership (PPP) basis. Additional Investment by private players in 12 airports in 1st and 2nd rounds is expected to bring around Rs. 13,000 crore. Another 6 airports will be put out for the third round of bidding.

  1. India 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 crore to Rs 2,000 crore in three years. It is expected that major engine manufacturers in the world would set up engine repair facilities in India in the coming year.  Convergence between Defence sector and the civil MROs will be established to create economies of scale. This will lead to maintenance cost of airlines to come down.

 

  1. POWER SECTOR
  2. Tariff Policy Reform

Tariff Policy laying out the following reforms will be released:

(i) Consumer Rights

  1. DISCOM inefficiencies not to burden consumers
  2. Standards of Service and associated penalties for DISCOMs
  3. DISCOMs to ensure adequate power; loadshedding to be penalized

(ii) Promote Industry

  1. Progressive reduction in cross subsidies
  2. Time bound grant of open access
  3. Generation and transmission project developers to be selected competitively

(iii) Sustainability of Sector

  1. No Regulatory Assets
  2. Timely payment of Gencos
  3. DBT for subsidy; Smart prepaid meters

 

  1. Privatization of Distribution in UTs

Power Departments / Utilities in Union Territories will be privatised. This will lead to better service to consumers and improvement in operational and financial efficiency in Distribution. This will also provide a model for emulation by other Utilities across the country.

 

  1. SOCIAL INFRASTRUCTURE: BOOSTING PRIVATE SECTOR INVESTMENT THROUGH REVAMPED VIABILITY GAP FUNDING SCHEME - Rs 8,100 CRORE The Government will enhance the quantum of Viability Gap Funding (VGF) upto 30% each of Total Project Cost as VGF by the Centre and State/Statutory Bodies. For other sectors, VGF existing support of 20 % each from Government of India and States/Statutory Bodies shall continue. Total outlay is Rs. 8,100 crore. Projects shall be proposed by Central Ministries/ State Government/ Statutory entities.

 

  1. SPACE SECTOR: BOOSTING PRIVATE PARTICIPATION IN SPACE ACTIVITIES there shall be level playing field provided to private companies in satellites, launches and space-based services. Predictable policy and regulatory environment to private players will be provided. 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 shall also be open for private sector. There will be liberal geo-spatial data policy for providing remotesensing data to techentrepreneurs.

 

  1. ATOMIC ENERGY RELATED REFORMS Research reactor in PPP mode for production of medical isotopes shall be established to

Promote welfare of humanity through affordable treatment for cancer and other diseases. Facilities in PPP mode to use irradiation technology for food preservation - to compliment agricultural reforms and assist farmers shall also be established. India's robust startup ecosystem will be linked to nuclear sector and for this; Technology Development-cumIncubation Centres will be set up for fostering synergy between research facilities and techentrepreneurs.

 

The Finance Minister announced the following measures to strengthen Infrastructure Logistics and Capacity Building for Agriculture, Fisheries and Food Processing Sectors:

  1. 1 lakh crore Agri Infrastructure Fund for farmgate infrastructure for farmers Financing facility of Rs. 1,00,000 crore will be provided for funding Agriculture Infrastructure Projects at farmgate & aggregation points (Primary Agricultural Cooperative Societies, Farmers Producer Organizations, Agriculture entrepreneurs, Startups, etc.). Impetus for development of farm-gate & aggregation point, affordable and financially viable Post Harvest Management infrastructure. Fund will be created immediately.

 

  1. Rs 10,000 crore scheme for Formalisation of Micro Food Enterprises (MFE)

A Scheme promoting vision of Prime Minister Shri Narendra Modi: 'Vocal for Local with Global outreach' will be launched to help 2 lakh MFEs who need technical upgradation to attain FSSAI food standards, build brands and marketing. Existing micro food enterprises, Farmer Producer Organisations, Self Help Groups and Cooperatives to be supported. The focus will be on women and SC/ST owned units and those in Aspirational districts and a Cluster based approach (e.g. Mango in UP, Tomato in Karnataka, Chilli in Andhra Pradesh, and Orange in Maharashtra etc.) will be followed.

 

  1. Rs 20,000 crore for fisherman through Pradhan Mantri Matsya Sampada Yojana (PMMSY)

The Government will launch the PMMSY for integrated, sustainable, inclusive development of marine and inland fisheries. Rs 11,000 crore for activities in Marine, Inland fisheries and Aquaculture and Rs. 9000 crore for Infrastructure - Fishing Harbours, Cold chain, Markets etc shall be provided. Cage Culture, Seaweed farming, Ornamental Fisheries as well as New Fishing Vessels, Traceability, Laboratory Network etc. will be key activities. There will be provisions of Ban Period Support to fishermen (during the period fishing is not permitted), Personal & Boat Insurance.This will lead to Additional Fish Production of 70 lakh tones over 5 years, Employment to over 55 lakh persons and double the exports to Rs 1,00,000 crore. The focus will be on Islands, Himalayan States, North-east and Aspirational Districts.

 

  1. National Animal Disease Control Programme

National Animal Disease Control Programme for Foot and Mouth Disease (FMD) and Brucellosis launched with total outlay of Rs. 13,343 crore to ensure 100% vaccination of cattle, buffalo, sheep, goat and pig population (total 53 crore animals) for Foot and Mouth Disease (FMD) and for brucellosis. Till date, 1.5 crore cows & buffaloes tagged and vaccinated.

 

  1. Animal Husbandry Infrastructure Development Fund - Rs. 15,000 crore

An Animal Husbandry Infrastructure Development Fund of Rs. 15,000 crore will be set up, with an aim to support private investment in Dairy Processing, value addition and cattle feed infrastructure. Incentives will be given for establishing plants for export of niche products.

 

  1. Promotion of Herbal Cultivation:

Outlay of Rs. 4,000 crore The National Medicinal Plants Board (NMPB) has supported 2.25 lakh hectare area under cultivation of medicinal plants. 10,00,000 hectare will be covered under Herbal cultivation in next two years with outlay of Rs. 4,000 crore. This will lead to Rs. 5,000 crore income generation for farmers. There will be network of regional Mandis for Medicinal Plants. NMPB will bring 800-hectare area by developing a corridor of medicinal plants along the banks of Ganga.

 

  1. Beekeeping initiatives Rs 500 crore

Government will implement a scheme for:

  1. Infrastructure development related to Integrated Beekeeping Development Centres, Collection, Marketing and Storage Centres, Post Harvest & value Addition facilities etc;
  2. Implementation of standards & Developing traceability system
  3. Capacity building with thrust on women;
  4. Development of quality nucleus stock and bee breeders. This will lead to increase in income for 2 lakh beekeepers and quality honey to consumers.

 

  1. From 'TOP' to TOTAL - Rs 500 crore "Operation Greens" run by Ministry of Food Processing Industries (MOFPI) will be extended from tomatoes, onion and potatoes to ALL fruit and vegetables. The Scheme would provide 50% subsidy on transportation from surplus to deficient markets, 50% subsidy on storage, including cold storages and will be launched as pilot for the next 6 months and will be extended and expanded.This will lead to better price realisation to farmers, reduced wastages, affordability of products for consumers. During the press conference, the Union Finance Minister also announced following measures for Governance and Administrative Reforms for Agriculture Sector:

 

  1. Amendments to Essential Commodities Act to enable better price realisation for farmers The Government will amend Essential Commodities Act. Agriculture food stuffs including cereals, edible oils, oilseeds, pulses, onions and potato shall be deregulated. Stock limit will be imposed under very exceptional circumstances like national calamities, famine with surge in prices. Further, No such stock limit shall apply to processors or value chain participant, subject to their installed capacity or to any exporter subject to the export demand.

 

  1. Agriculture Marketing Reforms to provide marketing choices to farmers

A Central law will be formulated to provide adequate choices to the farmer to sell their produce at remunerative price; barrier free Inter-State Trade; Aframework for e-trading of agriculture produce.

 

  1. Agriculture Produce Pricing and Quality Assurance:

The Government will finalise a facilitative legal framework to enable farmers to engage with processors, aggregators, large retailers, exporters etc. in a fair and transparent manner. Risk mitigation for farmers, assured returns and quality standardisation shall form integral part of the framework.

(Source-PIB)