After Big Reforms, Now PMO is Off With a Bang Special thrust on infrastructure, energy and financial sectors

    The Prime Minister's Office has drawn up a list of reforms that can be implemented by the executive and will have the effect of unlocking investments and removing hurdles for expansion of projects. These include setting up a railway tariff authority, nudging RBI to issue new bank licences, putting in place a new policy for pricing of natural gas, and ensuring faster clearances for private sector oil and gas producers like Cairn and RIL. 

The government has selected four areas — finance, infrastructure, energy and industry — to show that "it means business", a top bureaucrat involved in the decision-making process said. Further, the government will sell its residual stake in Hindustan Zinc and BALCO to the majority owner, the Vedanta Group, which acquired control of these companies during the privatisation carried out in the NDA era. It also plans to set up a National Investment Board (NIB) within a month, clear a bunch of large urban infrastructure projects, including new airports, metro networks and sealinks, and operationalise infrastructure debt funds. The list, which was described to this paper by senior officials, has been compiled by the PMO on the basis of inputs from various ministries. "The government means business and the coming weeks will show how it does so," a top government bureaucrat with direct knowledge of the plans told ET. None of these decisions, with the likely exception of the one on banking licences, needs parliamentary approval.Issuing New Bank Licences May Not Be Easy 
The plan to issue new bank licences may encounter logistical hurdles as RBI has insisted on an amendment to the Banking Regulation Act, explicitly empowering it to dismiss boards of banks. The government could issue an ordinance, an official said, but this would have to be ratified by Parliament, something far from certain, given the sour relationship between Congress-led UPA and the principal Opposition party, BJP. 
In a note issued to its clients on Monday, listing a catena of possible reforms and their likelihood, the brokerage arm of Goldman Sachs termed the possibility of new bank licences as "less likely". If the government issues an ordinance, RBI is likely to announce norms for new players, including industrial houses, paving the way for the likes of Aditya Birla Group, M&M Financial Services, Tata Group as well as NBFCs such as the Shriram Group to set up new banks. 
The government is also in talks with the Vedanta Group to reach a final decision on the valuation of the residual minority stakes in HZL and BALCO. The interministerial group has been unable to resolve the issue so far. Finance Minister P Chidambaram is keen to bring about an early resolution to the imbroglio surrounding gas pricing. Both RIL and its partner BP have made it clear that the removal of the $4.20-per-unit cap imposed in 2009 (ending in March 2014) is essential for them to commit long-term investments. Further, the government is eager to ensure faster clearances to investment proposals from private sector oil and gas producers so that they can ramp up production. The government is set to introduce pooling of gas prices so that imported fuels such as liquefied natural gas can be used for a temporary period. 
It is estimated that about 10,000 MW of gas-based power plants are idle because of non-availability of domestic gas. LNG costs almost $10 a unit more compared with domestic natural gas. The government is considering the options of pooling prices of domestically-produced gas and imported gas and offering it at an average price that is commercially viable for power plants. 
The other infrastructure sector set to get a fillip is the railways, which has remained with non-Congress ministers for nearly 16 years. In order to put railway tariffs on a sounder footing, a railway tariff board will be set up to rationalise tariffs. Rationalisation is likely to meet higher tariffs for passengers and lower freight rates. 
The government will also issue request for proposals for new airports at Navi Mumbai, Goa and Kollam and clear a policy to make major Indian airports as aviation hubs on the lines of Dubai.