No fresh agenda, lots of unfinished work for PM Modi's new ministers to do

What will the content of work be for the new council of ministers Prime Minister Narendra Modi has picked, for the remainder of the slightly less than three-year time frame available to this government? Going by the 29 bills listed as government business in Parliaments’ monsoon session, they will be mostly busy implementing the policies announced so far instead of bringing in new ones. None of the bills are new policies, but are aimed at improving aspects of the ones already in play. 

It should satisfy the investors and consequently the markets too, as this would lead to policy stability. Business Standard examined 11 key ministries for the policies that are already on top of their agendas and most of them are of less than three years vintage. All the ministers who were asked to leave have fallen short on implementation, so it makes little sense to bring in new policies. 

Petroleum

New petroleum minister Hardeep Singh Puri has landed into the oldest problem in India’s oil sector--to keep the prices of imported oil low. The oil sector globally has been in the biggest turmoil for decades: Would oil prices slip lower as Opec+ splits or would the prices harden as demand for transport revives after Covid slackens? This problem cannot be solved as a policy issue and as per analyst reports could keep Puri busy through FY22 and FY23 .

The other dos on his plate are plans to expand domestic production of both oil and gas. The annual production level for oil is down at 32.169 million metric tonnes (MMT) in FY20 (from 35.68 MMT in FY18) and for gas at 31,180 MMSCM from 32,649 MMSCM. To push local production, the government has handed out 94 awards for oil and gas fields under the open acreage licensing policies. Since the ministry has already invited responses to its new model revenue sharing contract, Puri has his work cut out. And then, he has to take a call on how much the economy should spend on hydrogen- and carbon-capture technologies. Both these frontiers are vast, and both demand massive levels of investment. India has only done pilot projects on them, even as China and Japan have sunk in billions of dollars. 

The big challenge for him, however, is to decide which of the energy sector public sector units to retain. The most difficult one of these is the revival or abandonment of ONGC.

Railways

There are more policies than profits in the Indian Railways. The biggest policy change in the sector was the doing away of the Railway Budget after 2016. It cut down on often shoddy policies and has given space to long-term business plans for the sector. Before Ashwini Vaishnaw took  charge of the portfolio, the ministry had announced one of the most significant of those--to run 150 pairs of local passenger trains it has already received bids for. The ministry is also trying to monetise its vast land assets. The ponderous ministry has a penchant for announcing reforms and then abandoning them. For instance plans to phase out diesel engines are being shifted back continually. 

It will be a massive challenge for the minister to reconcile such an organisation of 1.4 million people to co-exist with private sector entities. These entities shall use the same lines and platforms, use the same catering and security staff to run their business, all the time with an implied commentary that departmentally-run trains are not as good. The plans to monetise the land assets pose another huge challenge. The ministry will have to evaluate how much of land it should lease or even sell and also how to plough back the money into productive investments. 

As if this were not enough, former minister Piyush Goyal had began a process of merging the nine officer cadres of the railways into a single one. Critics reckon that one of the reasons he may have had to step aside is the blowback from this move. 

Health

The website of the health ministry still notes Covid is spread more by contact than through air. “Studies to date suggest that the virus that causes Covid-19 is mainly transmitted through contact with respiratory droplets, rather than through the air”. Obviously the ministry has a lot of catching up to do under health minister Mansukh Mandaviya.

Getting adequate supply of vaccines, pushing them to 1.36 billion people twice, and all the time wary of surge in Covid cases, is a good enough challenge for the minister to handle for a long time to come. The ministry, in any case, has more policies than any minister will be able to survey more than once in an average ministerial career.  

Mandaviya will instead find his ministry needs to be here and now, to get the better of Covid. Pushing the new Rs 23,000 crore support for Covid-19 emergency response made available by the union cabinet in July just before he took over, shall be a most difficult task. Some part of the earlier Rs 15,000 crore provided in FY21 is yet to be fully utilised. This is the health ministry’s biggest challenge. It has enough policies to deal with all classes of disease. But it often returns the money. Its performance has improved only in FY21, the most apocalyptic year the ministry has faced. The amount it has returned is just about Rs 2,235 crore, or less than three per cent of its budget. 

Education

There is one policy for Dharmendra Pradhan to get done. It is to implement the New Education Policy. And it is the states which shall have to get it done. Till now, the policy adopted by the Centre in 2020 has seen more written about it, instead of being implemented. Covid has justifiably pushed most of its implementation in the back burner since students cannot come to school. Once they do, there is an awesome lot to do as part of India’s twin battle against ill health and low education outcomes. 

As the Policy itself puts it, this will require multiple initiatives and actions, which will have to be taken by multiple bodies in a synchronised and systematic manner. The ministry, the state departments of education, the regulatory bodies of school and higher education, NCERT, SCERTs, schools and universities--state-run, Centre-run, autonomous and private sector-run--have to ensure that the policy is implemented in its spirit and intent, through coherence in planning and synergy across all these bodies involved in education. It is a work order for decades. 

Information Technology

India has yet to pass its Personal Data Protection Law to give a foundation to its digital journey. That will be a big order of business for Ashwini Vaishnaw as the minister for electronics and information technology. The bill is sitting in Parliament for a long time with a standing committee headed by Shashi Tharoor. 

But beyond that, the ministry now has 25 policies or programmes spanning almost every sector of the economy, each devised within the past seven years. Aadhaar is the oldest of them, but initiatives like EGem and ENam are rapidly gaining scale. Just like health, a survey of each can clog up a minister’s tenure, they are so vast in scope. Vaishnaw will find several laggards among them and just as the finance ministry now shuts down public sector units, it may be a useful idea to begin closing some of them. These will not be policies but a pragmatic business plan. Vaishnaw will find it a challenge though as eco-systems have already developed around those, which will fight hard to block their closure. But what is a startup economy if it cannot cut losses before it thinks of opening fresh avenues? 

MSME

This is a ministry that has just one point of action. Revive the 64 million-odd medium, small and micro enterprises ruined by the 18 months of Covid outbreak. To make the informal sector liven up there is no other sector with so much linkage there, except possibly that of rural development. As part of the Atmanirbhar package last year, the finance ministry had announced several measures. These included:

• Rs 20,000 crore subordinate debt 
• Rs 3 trillion collateral-free Automatic Loans or Emergency Credit Line Guarantee Scheme
• Rs 50,000 crore equity infusion through MSME fund of funds. 
• A new revised criterion for classification of MSMEs. 
• A new registration of MSMEs through ‘Udyam Registration’ for Ease of Doing Business. 
• No global tenders for procurement up to Rs 200 crore.

But their delivery has stalled. Data from the ministry itself shows the scale of the problem. The Emergency Credit Line is the largest reach out by the government for the MSMEs and while 82 per cent had been used up by March this year, only 87 lakh MSMEs have dipped into this pot. It means less than 14 per cent of the total number of the eligible units in the country had been helped by the measure. The corpus of the scheme has now been extended and rightly so. It is up to minister Narayan Rane to ensure the catchment area of the scheme expands. 

Steel

You might wonder why this sector needs a minister at all. The ministry runs some very profitable and not-so-profitable companies. From SAIL and NMDC to RINL, MOIL and KIOCL, all are listed entities and the demand for their products is market determined. They could happily be merged with the department of heavy industry or mines and lead a happy life there too. 

The ministry has already got a National Steel Policy framed in 2017 under its belt. Its key clause is pushing domestic industry to meet their entire demand of steel and high-grade automotive steel, electrical steel, special steel and alloys for strategic applications from these steel companies. It is not yet possible since India does not produce several categories of steel but there is yet another policy, “Domestically Manufactured Iron & Steel Products (DMI&SP) Policy” to do the job. However, ‘specialty steel’ has recently been included under the Production Linked Incentive scheme to pull investments into these products. It is difficult to figure what role a ministry can perform where demand and supply is a response to market forces!

Textiles

By its own admission, this ministry has been running only one major policy or scheme—the Technology Upgradation Funds Scheme (TUFS). In operation since 1999 to facilitate technology upgrades of the textiles industry in the country, India’s textile exports have risen by a CAGR of only 1.2 per cent since FY15. The figures were similarly dismal earlier too.The present version of the scheme is again of this government, the amended TUFS, launched in January 2016. The government has not skimped on funds, ATUFS has drawn in Rs 8,013 crore in five years. 

Textile minister Piyush Goyal however has got into a sweet spot, of late. He now also has the Production Linked Incentive scheme since last year to show results from the industry which despite its high employment content contributes just 2 per cent to the GDP and a flat 12 per cent to export earnings. Some of the export numbers could also change in the short run as Indian yarn exports to the USA have shot up 46.4 per cent in five months of this calendar year. The ministry needs to ask the industry to deliver such consistent results year after rather than offer more policies for the sector to deliver. 

Ports

Heard of Sagarmala of late? When Nitin Gadkari moved out of the ministry, the plan seems to have got shelved. Instead outgoing minister Mansukh Mandaviya had announced another policy, a Maritime India Vision 2030. Like the former this too was meant to create world class port infrastructure. The sector, again, could do without such announcements but offer performance instead. In ten years since FY10 the volume of total cargo handled at all major ports has grown at a CAGR of less than 4.5 per cent. 

And after all the efforts of the past few years the ministry has found the rate of increase in the volume of freight passing through minor ports is “higher as compared to the major ports of lndia”. The reasons for this bizarre trend? “Some of the reasons may potentially be attributed to availability of deep drafts and flexibility in fixing of ports tariffs”, the ministry has replied in Parliament. There must have been some improvements overall. In this financial year as exports have risen, there are no reports of clogged ports. But to make improvements stick, Sarbananda Sonowal has some dredging to do at the ports instead of writing a third port policy for this government. 

Power

It is one of the few ministries where the minister came back with a promotion. R K Singh has delivered on reforms and thus became a cabinet minister. He has managed to get some of the perennially loss-making discoms reduce their bills. This is a huge achievement that creates fiscal space for states.

Clearly then, one should expect continuation of his seven successful policies. Of these the latest one builds on the success with Discoms. The Revamped Distribution Sector Scheme with an outlay of Rs 3,03,758 crore of which the central government’s budget support is for Rs 97,631 crore will run over a period of five years from FY22 to FY26. The Scheme is again benchmarked to improvements for the money to flow. It aims to reduce the transmission losses to a range of 12-15 per cent. 

And then there is renewable energy. India plans to achieve 175 Gw of RE capacity by December 2022, and a total of 96.95 Gw of renewable energy capacity till the end of June this year. Factoring in the Covid induced disruption, the ministry has itself added another seven-and-a-half months to the deadline. The policies for both power, RE and the minister are in place. It is about execution. 

Civil Aviation 

The attention given to Railways even a decade ago, is now reserved for civil aviation. As new minister Jyotiraditya Scindia would be discovering, it is the here and now problems that beset the sector, possibly the most pummelled by Covid. Far and away places like Raxaul in North Bihar now rightly demand an airstrip. The cocktail leaves little room for new policies. The Airports Authority of India  has already awarded six airports to the private sector for Operations, Management and Development contracts on a 50-year lease. State governments are frenziedly developing greenfield airports on PPP mode spurred by opening up of 100 per cent foreign direct investment in both greenfield and brownfield airport projects. It is quite likely that all junction stations of Indian railways shall have a functional airport in a few years time. 

And of course the disinvestment process for Air India could still be on, even then.