Economic Boost 4th Tranche Update by Indian Finance Minister

On 17th of May, 2020, the Indian Finance Minister unveiled the government’s 4th and final tranche of the economic mega stimulus. In this tranche, the emphasis is on reforms on various industry sectors like coal and minerals, airspace management, defense production, power distribution, defense, aerospace, and much more.

The finance minister said that the country needs to prepare for tough competition in the near future as India will rise to show its economic supremacy to the world. This is to be done by making the country self-sufficient in all aspects. India will be challenging global value chains and shall finally become ‘Self-Reliant Bharat.’

In the previous or third tranche, emphasis was laid on a mix on legislative, financial and reform measures. These are mostly aimed at augmenting the pricing power of Indian farmers, and get a fair profit from produce. Trade barriers are to be dismantled, and new laws are made for a freer commodity and food market. Laws are there now for better infrastructure.

Here is what the 4th tranche is all about.

Main points of the Economic stimulus 2020 4th tranche

Structural Reforms:

Policy reforms to make fast track investments

1. These fast-track investment clearances shall be through Empowered Group of Secretaries.

2. Industrial infrastructure shall be upgraded. New schemes shall be implemented in all states through the challenge mode for industrial clusters, leading to upgrading of common infrastructure connectivity and facilities. 

3. Government shall focus on 8 industry sectors now, namely coal, airspace, minerals, defense production, power distribution companies, social infrastructure projects, atomic energy and space sectors.

4. In the Coal sector, the government shall be introducing commercial mining to this industry. This is being done because India requires import of substitutable cal to be reduced, and also needs the increased self-reliance in production of coal. There will be an auction of 50 blocks. There shall be an investment of Rs. 50000 crores for evacuation of Coal India Limited’s target of 1 billion tons of coal production, by the period of 2023 to 2024, all from private blocks.

5. Minerals: The government will be taking steps to enhance private investment in this sector. The Finance Minister explained why there stamp duty payable during the time of awarding of mining leases is given. According to her, 500 mining blocks shall be transparently auctioned to increase the industry’s competitiveness.

6. Defense production: The government wants the country’s defense production to be stronger, and does not want to rely on foreign sources for products and materials. It desires this crucial industry to be made self-sufficient. There shall be indigenization of spares that are imported, a separate budget for the provision of domestic capital procurement, and more. This is to promote and improve autonomy, better production, and efficiency. Foreign Investment shall be increased from 49% to 74%.

7. Civil Aviation: The Finance Minister said that restriction of the ISA or Indian Air Space shall be eased considerably. This is so as to increase the efficiency of civilian flying. This will bring Rs. 1000 crores each year for the aviation industry. World-class airports shall be made as well through the PPP route.

8. Reforms in power sector: In union territories, power distribution companies need to be privatized for keeping in line with the new tariff policies. This shall make the industry stronger and bring more efficiency. It shall stabilize the sector as well.

9. Boosting of private sector investment: Rs. 8100 crores shall be used for the purpose of boosting private sector investment by revamped viability gap funding scheme.

10. Space sector reforms: The country shall encourage and boost private participation in this sector as well, as the government is going for a liberal geo-spatial policy. The private sector shall earn through satellite services, launches, etc.

11. Atomic energy: the government now intends to boost the atomic energy startup ecosystem. It will foster synergy between tech entrepreneurs and research facilities.