Background

• Last month, as a part of the Aatmanirbhar Bharat package, Finance Minister Nirmala Sitharaman announced several measures to tide over the challenge posed by the COVID-19 pandemic.

 

New Public Sector Enterprise Policy

• The Finance Minister said the government will open all sectors to the private sector including strategic sectors, and a new coherent policy in this regard will be unveiled.
• The proposed policy will notify the list of strategic sectors requiring the presence of at least one state-owned company along with the presence of the private sector. In all other sectors, the government plans to privatise public sector enterprises depending upon the feasibility. 
• Even in the strategic sectors, no more than four PSUs will be allowed, with the rest being privatised, merged or brought under holding companies.

 

Structural reforms 

• The Finance Minister also announced structural reforms for several sectors, such as coal, minerals, defence production, civil aviation, power distribution in Union Territories, space research and atomic energy.

 

Coal mining

• The government would end the monopoly of Coal India Ltd (CIL) in coal mining by allowing private companies on a revenue-sharing model.
• A revenue sharing mechanism instead of the earlier fixed price per tonne will introduce competition, transparency and private sector participation in the market.
• Any party could bid for coal blocks and sell in the open market. This is against the earlier norm where only captive consumers with end-use ownership could bid.
• Nearly 50 blocks will be up for bidding, and the government will invest Rs 50,000 crore for building evacuation infrastructure.
• India has the third-largest coal availability within its untapped mines and yet India still imports coal. Because of this, the emerging sectors suffer because of lack of raw material availability.

 

Mining sector

• On non-coals, 500 mineral blocks will be auctioned and the government will remove the distinction between captive and non-captive mines to allow the transfer of mining leases and the sale of surplus unused minerals, leading to better efficiency in mining and production.

 

• Captive mining is the coal mined for a specific end-use by the mine owner, but not for open sale in the market. 

 

• Besides, the government will also introduce a joint auction of bauxite and coal blocks to enhance the competitiveness of the aluminium industry. The move will help improve availability and access affordable minerals.

 

Defence

• To boost the government’s Make in India campaign, foreign investment limit in defence manufacturing will be hiked to 74 per cent from 49 per cent via the automatic route while some weapons and platforms will be banned for imports.
• Items banned for imports can only be purchased from within the country.
• State-owned Ordnance Factory Boards will be corporatised for better management and will later be listed on the stock market.
• Corporatisation, however, does not mean privatisation. The aim is to make sure that almost 60 ordnance factories in India are better managed so that they can traded publicly.
• The reforms aim to reduce India’s massive defence import bill.
• According to the Stockholm International Peace Research Institute (SIPRI), the US, China and India were the world’s three biggest military spenders in 2019, followed by Russia and Saudi Arabia.

 

Power distribution 

• Power distribution companies in Union Territories (UTs) will be privatised for better service and the plan would be a model for emulation by other utilities across the country.

 

Airports

• Six more airports will be auctioned for private participation and an additional private investment will be invited at 12 airports.
• Steps will be taken to ease restrictions on Indian airspace, of which only 60% is currently available. This will save flying time and aviation fuel.

 

Space programme

• Private companies will be allowed a role in India’s space programme, including in satellites, launches, and space-based services. The companies will get to use the facilities of ISRO, the state-owned space agency.
• Future projects for planetary exploration and outer space travel would be open for the private sector.

 

Research reactor 

• Public-private partnerships will also be introduced in the atomic energy sector, to set up a research reactor for production of medical isotopes and irradiation facilities for food preservation.

 

 

Why in News?

• Several workers’ unions have announced that they would launch an agitation against privatisation of public sector companies by the Central government.