Atmanirbhar Bharat Package- Part 5- The Phoenix Flight: Reviving the Economy

(This is the Fifth Article in a series of six articles deciphering the “Atmanirbhar Bharat Package” of the Government of India to revive the Indian Economy from the shock of the COVID-19 pandemic and the economic crises thereafter. This article focuses on the steps taken for revival of the economy through policy reforms)

 

Bill Gates has made a famous comment “Governments will always play a huge part in solving big problems. They set public policy and are uniquely able to provide the resources to make sure solutions reach everyone who needs them. They also fund basic research, which is a crucial component of the innovation that improves life for everyone.” This statement seems to be proving true in case of the Indian Policy response to the economic crisis emerged due to COVID-19 & the lock down.

 

One of the major functions of the Central Government is to frame policies for the welfare of the economy. Especially in the post-globalization scenario, the major role of the central government has been policy making. Making use of its legal monopoly, the government tries to frame new policies, amend the existing ones and sometime scrap the irrelevant policies as per the need of the hour. In today’s critical times, the government seems to be exercising its legal monopoly to revive the economy from the slowdown.

 

 

Some of the most important policy reforms towards enhancing investments in India are the ‘Fast track Investment Clearance through Empowered Group of Secretaries (EGoS)’ and setting up of Project Development Cell in each ministry to prepare investible projects, coordinate with investors and the state & central governments. This will provide a clear thrust to the investments in various sectors. The policy to rank states on Investment Attractiveness to compete for new investments will trigger a positive competition amongst the states, which in turn will improve the overall infrastructure and investment climate of the states. The incentive schemes for Promotion of new Champion Sectors in sectors like Solar PV manufacturing, Cell Battery Storage, etc. will not only help in reducing imports from China but will lead us towards ‘Atmanirbhar Bharat’ in the truest sense.

 

Industrial infrastructure in the states is being upgraded through Challenge mode for Industrial Cluster up gradation of common facilities and connectivity. New land parcels will be made available for promoting new investments through Land Banks and GIS based Industrial Information System. In order to achieve self – reliance in coal production, the government is introducing competition, transparency and private participation in Coal Sector by allowing bidding by any party for a coal block and allowing them to sell in the open market. Easing of entry norms, nearly 50 blocks will be offered immediately. It will not only help us in achieving self-reliance in coal production but will also generate adequate amount of employment in the sector. Allowing auction of partially explored blocks and incentivizing early production will act as a catalyst in the process. Coal Gasification / Liquefication will be incentivised through rebate in revenue share. This will not only result in significantly lowering the environmental impact but will also assist in switching to a gas – based economy. Other policy reforms in the coal sector such as Coal Based Methane (CBM) extraction rights being auctioned from Coal India Ltd’s mines, Ease of doing business measures such as Mining Plan simplification will make the sector investor friendly.

 

The process of nationalization of the coal sector was supposed to bring in more employment, efficiency and equality in the stakeholders associated with the sector but history tells us that none of it could be achieved. It can be stated as a bold step to encourage private investments in the sector. It will not only bring state of the art technology but will also increase competitiveness of various mineral based industries. Policy reforms such as removal of distinction between captive and non-captive mines will allow transfer of mining leases as well as sale of surplus unused minerals. Other reforms like creation of Mineral Index and Rationalization of stamp duty payable at the time of award of mining leases will boost the sector and its efficiency.

 

Another sunrise sector for Indian industry is the Defence Production sector. The ‘Make in India’ program for Self Reliance in Defence Production coupled with policy reforms is all set to change the face of the sector. Increasing the FDI limit in the sector through the automatic route from 49% to 74%, Time bound procurement process, etc. are some of the policy boosters provided by the government.

 

The Civil aviation sector is one of the promising sectors for the economy but is currently one of the worst hit sectors due to COVID-19. With the easing of restrictions on utilization of the Indian Air Space, the sector can have a total benefit of about Rs. 1000 Crore annually. This will lead to optimal utilization of the air space, reduction in fuel use and travel time resulting in positive environmental impact. Airports serve as an important revenue source these days. The Airport Authority of India (AAI) is the government agency responsible for the development of airports in India. With opening up of the Public-Private-Partnerships in the sector, the sector is all set to get a major boost.

 

Other policy initiatives for sectors like Aircraft MRO, Tariff Policy Reforms for DISCOMs, Privatization of electricity distribution in Union Territories, boosting private investments in social infrastructure through revamped Viability Gap Funding Scheme worth Rs. 8,100 crore, boosting private participation in space activities as well as atomic energy related reforms are all set to bring about drastic but positive and sustainable changes in the sectors.

 

Though the COVID-19 has posed a unique challenge to the entire economy, the government has been able to covert this challenge into an opportunity. These fundamental reforms will surely enable the speedy revival of the economy; what can be best termed as a ‘Phoenix Flight’ of the Indian Economy.