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Daily News Simplified - DNS

17 05 20Notes

SL. NO. TOPICS

THE HINDUPAGE NO.

1 Govt. throws open defense, coal sectors 01

2 Coal Sector Reform: (Govt. throws open defense, coal sectors )

01

3 Defence Sector Reforms (Govt. throws open defense, coal sectors )

01

4 Civil Aviation Reforms (Govt. throws open defense, coal sectors )

01

5 Power Sector Reforms (Govt. throws open defense, coal sectors )

01

6 Infrastructure funding trough VGF (Govt. throws open defense, coal sectors )

01

7 Space Sector Reform (Govt. throws open defense, coal sectors )

01

8 Atomic Energy Reform (Govt. throws open defense, coal sectors )

01

9 Reforms and Agriculture 12

10 India opposes re-joining RCEP over China concerns 07

Dated: 17. May. 2020DNS Notes - Revision

Title Govt. throws open defense, coal sectors (Page Number 1)

Syllabus GS III: Economic reforms

Theme Understanding the summary of reforms

Highlights Context: Finance Minister announces new horizons of growth; structural reforms

across Eight Sectors paving way for Aatma Nirbhar Bharat.

KEY HIGHLIGHTS Commercial Mining introduced in Coal Sector Diversified Opportunities in Coal Sector Liberalized Regime in Coal Sector Enhancing Private Investments and Policy Reforms in Mineral Sector Enhancing Self Reliance in Defence Production Policy Reforms in Defence Production Efficient Airspace Management for Civil Aviation More World-Class Airports through PPP India to become a global hub for Aircraft Maintenance, Repair and Overhaul

(MRO) Tariff Policy Reform in Power Sector; Privatization of Distribution in UTs Boosting private sector investment through revamped Viability Gap Funding

Scheme in Social Sector Boosting private participation in space activities Reforms in Atomic Energy Sector

Smt. Sitharaman outlined the need for Policy reforms to fast track investments and the steps taken by the Government in this regard. She stated that fast track clearance is being done through Empowered Group of Secretaries, a Project Development Cell would be set up in each Ministry to prepare investable projects and coordinate with investors and Central and State governments.


Personal Notes



Syllabus GS III: Economic reforms Theme Understanding coal sector reforms

Highlights COAL & MINERAL SECTORIntroduction of Commercial Mining in Coal SectorThe Government will introduce competition, transparency and private sector participation in the Coal Sector through:

a. 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.

b. 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.

c. There will be exploration-cum-production regime for partially explored blocks against earlier provision of auction of fully explored coal blocks. This will allow private sector participation in exploration.

d. Production earlier than scheduled will be incentivized through rebate in revenue-share.

Diversified Opportunities in Coal Sector

a. 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 – discount on value addition on Coal.

b. 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.

Liberalised Regime in Coal Sectora. Coal Bed Methane (CBM) extraction rights will be auctioned from Coal India

Limited’s (CIL) coal mines.b. Ease of Doing Business measures, such as Mining Plan simplification, will be

taken. This will allow for automatic 40% increase in annual production.c. Concessions in commercial terms given to CIL’s consumers (relief worth Rs

5,000 crore offered). Reserve price in auctions for non-power consumers reduced, credit terms eased, and lifting period has been enhanced.

Brief History of Coal Nationalisation in India With dawn of the Indian Independence, a greater need for coal production was felt

for industrial development. This led to formation of National Coal Development Corporation (NCDC) in 1957 with 11 collieries.

They were tasked to explore new coalfields and expedite development of new coal mines in India. However, the growing apathy of the private owners to invest in coal mining resulted in oil price shock threatening energy security in the country.

This prompted Government to nationalise coal mines in the country in two phases in the seventies with a view to ensuring safety, conservation and scientific development of huge reserve of coal that the country was endowed with.


Thus, the Government took over all the coking coal mines on October 16, 1971 and nationalised them on May 1, 1972. Bharat Coking Coal Limited was thus born. Subsequently non-coking coal mines were nationalized in 1973owned by Coal Mines Authority Limited (CMAL).

In the year 1975, NCDC and CMAL were merged and Coal India Limited (CIL) came into being on October 21, 1975 as a formal holding company with a Mission to produce coal, efficiently and economically.

Supreme Court in August, 2014 had cancelled the allocation of coal blocks and this enforced the government to come up with a new legislation namely The Coal Mines (Special Provisions) Act, 2015.

Meaning of Captive Mining Earlier, the need of coal by Private Sector for industrial production (such as steel,

iron, cement etc.) was allowed by Coal India Limited (CIL) and accordingly CIL allocated these private players coal blocks to mine coal.

Major consumers of coal in India are Power and Steel sectors. Others include Cement, Fertiliser, Brick Kilns, and small scale industries.

However, the industries were not allowed to sell coal in the open market but only use such coal for their own private/industrial use.

Later, the government allowed these private players to sell 25% of the coal mined in the open market. 75% of the Coal had to be used for own industrial purpose by the private entities.

India is the third largest coal producing country in the world after China and USA. Despite this, India faced severe shortage of good quality coal because of restriction imposed by CIL on private players to sell only 25% of mined coal. This led to decline in supply and increased dependence on import.

So, as per the 2020 Amendment, government has removed all restrictions on captive mining and now industries are free to sell all coal mined in the open market.

Benefit of the Amendment:

a. Enhancing the ease of doing businessb. Democratization of coal mining sector by opening it up to anyone willing to

invest.c. Offering of unexplored and partially explored coal blocks for mining through

prospecting license-cum-mining Lease (PL- cum-ML).d. Promoting Foreign Direct Investment in the coal mining sector by removing

the restriction and eligibility criteria for participation.e. Allowing of successful bidder/allottees to utilise mined coal in any of the plant

of its subsidiary or holding companyf. Attracting large investment in coal mining sector as restrictions of end use

has been dropped.

Important aspects of the Amendment Companies with no prior experience can apply - Companies which do

not possess any prior coal mining experience in India and/or have mining experience in other minerals or in other countries can participate in auction of coal/lignite blocks. This will not only increase participation in coal/lignite block auctions, but also facilitate the implementation of FDI policy in the coal sector.

Lifting End-use-Restriction - The government has lifted end-use-restriction for coal mines to end captive mining regime. Now, the companies which are


not ‘engaged in specified end-use’ can also participate in auctions of Schedule II and III coal mines.

Wider Participation - The removal of the end use restriction would allow wider participation in auction of coal mines for a variety of purposes such as own consumption, sale or for any other purpose, as may be specified by the Central Government.

PL-cum-ML - The Bill also allows prospecting licence-cum-mining lease (PL-cum-ML) for coal/lignite which increases the availability of coal & lignite blocks, and coal blocks of varying grades in a wide geographical distribution will be available for allocation.

Successful Bidders Free to use Coal - The successful bidders/allottees have now been entitled to utilize mined coal in any of its plants or plants of its subsidiary or holding company. Amendments also provide for allocation of the coal mine to the next successful bidder or allottee, subsequent to termination of its allocation.

Designated Custodian for Management of the Mines - A provision has also been made for appointment of Designated Custodian for Management of the Mines, apart from Schedule II mines, which have come under production and whose vesting/ allotment order has been cancelled.

Environment and Forest Clearances - With the amendments, environment and forest clearances along with other approvals and clearances shall automatically get transferred to the new owners of mineral blocks for a period of two years from the date of grant of new lease. This will allow new owners to continue with hassle free mining operations. During this period, they may apply for the fresh licence beyond the period of two years.

Deciding about New Lease Holders before Expiry of Term - The auction of lease of mines can now be started before expiry of lease period. It will enable the state government to take advance action for auction of mineral blocks so that the new lease holder could be decided before the existing lease gets expired.

Composite License Allowed - The new provisions will also augment the exploration of the deep seated minerals and minerals of national interest by allowing Non Exclusive Reconnaissance Permit (NERP) holders to apply for Composite Licence or Mining Lease (PL-cum-ML).

Ease of Doing Business - Various repetitive and redundant provisions of MMDR Act and CMSP Act have also been omitted for Ease of Doing Business.


Personal Notes



Syllabus GS III: Indigenization of Technology

Theme Understanding the liberalization of Defence sector

Highlights DEFENCE SECTOR

1. Enhancing Self Reliance in Defence Production ‘Make in India’ for Self-Reliance 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.

Improve autonomy, accountability and efficiency in Ordnance Supplies by Corporatisation of Ordnance Factory Board.

2. Policy Reforms in Defence Production FDI limit in the Defence manufacturing under automatic route will be raised

from 49% to 74%. 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.


Personal Notes



Syllabus GS III: Infrastructure (Airways)

Theme Understanding how reforms will help Aviation sector

Highlights CIVIL AVIATION SECTOR1. 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.

2. More World-Class Airports through PPP3. 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.

Personal Notes



Syllabus GSIII: Infrastructure (Energy)

Theme Understanding how reforms in Power sector will help Economy

Highlights POWER SECTOR1. Tariff Policy ReformTariff Policy laying out the following reforms will be released:

(i) Consumer Rights

(a) DISCOM inefficiencies not to burden consumers(b) Standards of Service and associated penalties for DISCOMs(c) DISCOMs to ensure adequate power; load-shedding to be penalized

(ii) Promote Industry

(a) Progressive reduction in cross subsidies(b) Time bound grant of open access(c) Generation and transmission project developers to be selected competitively

(iii) Sustainability of Sector

a. No Regulatory Assetsb. Timely payment of Gencosc. DBT for subsidy; Smart prepaid meters

2. Privatization of Distribution in UTsPower 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.


Personal Notes


Syllabus GS III: Economy

Theme Understanding the mechanism to gather funding for reforms.

Highlights SOCIAL INFRASTRUCTURE: BOOSTING PRIVATE SECTOR INVESTMENT THROUGH REVAMPED VIABILITY GAP FUNDING SCHEME - Rs 8,100 CRORE

The main constraint in India’s infrastructure sector is the lack of source for finance. More than the overall difficulty of securing funds, some projects may not be financially viable though they are economically justified and necessary.

This is the nature of several infrastructural projects which are long term and development oriented. For the successful completion of such projects, the government has designed Viability Gap Funding (VGF).

Viability Gap Finance means a grant to support projects that are economically justified but not financially viable.


Reforms Suggested 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.

Personal Notes



Syllabus GS III: Space Technology

Theme Major highlights if the reforms in Space Sector.

Highlights 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 remote-sensing data to tech-entrepreneurs.

These aspects have been mentioned in the draft Bill by the Department of Space in 2017. This however hasn’t yet made it to Parliament for discussion.

As per the draft, there is a need for national space legislation for supporting the overall growth of the space activities in India.

This would encourage enhanced participation of non-governmental/private sector agencies in space activities in India, in compliance with international treaty obligations, which is becoming very relevant today.

In her July 2019 Budget speech, Finance Minister had mentioned the creation of a public sector company by ISRO called New Space India Limited. This was similar to its existing company, Antrix, and allows small satellite technology to be transferred to private industry and outsource the development of ISRO’s workhorse Polar Satellite Launch Vehicle to the private sector.


Personal Notes


Syllabus GS III: Energy sector

Theme Major highlights if the reforms in Energy Sector.

Highlights ATOMIC ENERGY RELATED REFORMS Research reactor in Public Private Partnership (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 start-up ecosystem will be linked to nuclear sector and for this,

Technology Development-cum-Incubation Centres will be set up for fostering synergy between research facilities and tech-entrepreneurs.

Personal Notes


Title Reforms and Agriculture (Page Number 12)

Syllabus GS III: Agriculture

Theme The measures announced for the agriculture sector.

HighlightsWhat are the measures announced by the government to deal with the farm?Abstract

As a part of 3rd tranche of Atmanirbhar Bharat Abhiyan, the government has announced a slew of long-term reform measures in the agriculture sector primarily aimed at addressing the systemic issues in agriculture that have long-clogged the sector which has been exposed by the current crisis inflicted by COVID 19 pandemic.

Context In a strategic response to the current crisis the government announced Rs.20 Lakh Crore

Atmanirbhar Bharat Abhiyan including a slew of measures both short-term and long-term in 4 parts.1st TrancheThis is aimed at energizing both supply and demand side of the economy including boosting credit particularly to small businesses, enabling the financial sector to do so particularly NBFCs and relief measures to middle class tax payers and employees to increase demand.2nd TrancheFocused on all-round support for migrant labours as an extension of PM Garib Kalyan Yojana3rd TrancheReforms in long-pending agriculture to improve the resilience of agricultural supply chain to be able to withstand stress like the one that is induced by the current crisis4th TrancheIndustry reforms focusing on structural changes by enabling private sector participation in some key sectors including defence production, mining, space and atomic energy.


This article focuses on the 3rd tranche and delineates the reforms in agriculture initiated under Atmanirbhar Bharat Abhiyan

Key featuresIn nutshell as we have mentioned the reforms in agriculture include a slew of long-term reform measures in the agriculture sector primarily aimed at addressing the systemic issues in agriculture like infrastructure gaps and governance reforms.Important Governance Reforms1. Revamping Essential Commodities ActProblem

The Essential Commodities in its present form has disincentivised the traders to ramp up storage capacities the lack of which is put to test in the current crisis.

This is because the act, by allowing the government to regulate stocks to control price rise, has hindered infrastructure development particularly storage infrastructure.

Reform The act would be amended to deregulate six categories of agricultural foodstuffs: cereals, pulses,

edible oils, oilseeds, potato and onion.

Impact It will bring more private investment into warehouses and post-harvest agricultural infrastructure.

Push for implementation of Model APMC Act The government had in the budget announced scaling up of Model APMC Act to create unified

markets across all states to enable farmers to better access agriculture markets. However since it was a model act only a few states like MP and Gujarat have implemented the act Now the government is planning to introduce a federal law to abolish inter-State trade barriers

thereby providing access to wider markets to farmers helping them to get better prices for their farm produce

Legislative backing for Contract Farming In addition the government is also giving a legislative backing to contract farming in India to

increase the certainty of markets to farmers

Reforms in Farm InfrastructureAgriculture Infrastructure Fund

The government has decided to establish an Agriculture Infrastructure Fund of Rs. 1 Lakh Crore under the administrative control of NABARD to ramp up post-harvest management infrastructure.

Personal Notes


Title India opposes re-joining RCEP over China concerns (Page Number 7)

Syllabus GS II: International Relations

Theme India’s decision on not joining RCEP.

Highlights RCEP

Context: The deadline for a response to a fresh proposal of India re-joining negotiations on the ASEAN-led

trade Regional Comprehensive Economic Partnership (RCEP) ran out on Friday, India indicated that global post-COVID-19 concerns over China had strengthened India’s opposition to the grouping.

PM Modi had announced India’s decision to quit the grouping, which includes the 10 ASEAN nations, Australia, China, Japan, New Zealand and South Korea in November, citing lack of protection for country’s agricultural sector among others.

Australia and Japan have been pushing for India’s membership of the RCEP.

Australian High commissioner recently said that If India did want to rejoin the [RCEP] negotiations, there would be no better time than now, because it would send a signal to the world that not only is India an attractive place to invest, but also, its potential of being a global manufacturing hub as envisaged by the government’s ‘Make in India’ policy was realisable.

Personal Notes

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