In the fifth and final tranche of her economic package, Finance Minister Nirmala Sitharaman on Sunday announced that the government would allocate additional Rs 40,000 crore, over and above the budgeted Rs 61,000 crore, to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in order to generate more employment in the country. Borrowing limit of states has been raised from 3 per cent of Gross State Domestic Product to 5 per cent in 2020-21, the finance minister said.
She said that reforms in the seven sectors will be the focus of the fifth and final tranche of economic stimulus package to deal with the economic fallout of the pandemic. "Package would focus on MGNREGA, healthcare and education, businesses, de-criminalisation of the Companies Act, ease of doing business, public sector undertakings, and resources related to state government," she pointed out.
New policies related to public sector undertakings (PSUs) would be announced soon to ensure those in strategic sectors would remain present, and the rest would either be privatised or merged, Sitharaman said.
"A new 'coherent' public sector enterprises policy will be formulated that will define strategic sectors which will have not more than four PSUs. List of strategic sectors requiring presence of PSUs in public interest will be notified. In strategic sectors, at least one enterprise will remain in the public sector but private sector will also be allowed," she said.
In other sectors, PSUs will be privatised. "To minise wasteful administrative costs, number of enterprises in strategic sectors will ordinarily be only one to four; others will be privatised/merged/brought under holding companies," she said.
In another crucial announcement, she said any debt incurred by companies on account of coronavirus would not be included in the category of default and no fresh insolvency proceedings would be initiated for a year.
She also announced decriminalisation of the Companies Act in violations involving minor technical and procedural defaults including shortcoming in CSR reporting, inadequacies in board report, filing defaults and delay in holding AGM.
Majority of the compoundable offences sections will be shifted to internal adjudication mechanism (IAM), she said adding that amendments will be brought through an Ordinance and will de-clog the criminal courts and NCLT.
Seven compoundable offences under the Companies Act altogether dropped and five to be dealt with under alternative framework, the finance minister said.
The finance minister, in her key address, announced that the minimum threshold to initiate insolvency proceedings would be raised to Rs 1 crore from Rs 100,000, in a move that would benefit MSMEs. She also said companies would be allowed to directly list securities in permissible foreign jurisdictions.
She said that public expenditure on health would certainly be increased and investments in grassroots institutions would be ramped up. "All districts will have infectious diseases hospital blocks, and public health labs will be set up at the block level. Research in health will be increased, and the National Digital Health blueprint will be implemented," she added.
For students hit by the pandemic, she said top-100 universities would be automatically permitted to start online courses by May 30, 2020. "An initiative for psycho-social support of students, teachers and families for mental health and emotional well-being, known as Manodarpan, will be launched immediately," she said.
Seven sectors, including MGNREGS, education and health, were the focus of Sitharaman’s final tranche of announcements. She also informed that the government was working on the next phase of 'ease of doing business' reforms.
In her fourth tranche of announcements under the package, labelled the ‘Arma-nirbhar Bharat mission’, the finance minister had on Saturday dealt largely with reforms – easing of foreign investment limits in defence manufacturing, privatisation of six more airports, and allowing the private sector in commercial coal mining. The cap on FDI under automatic route in defence production was raised to 74 per cent from 49 per cent, and the import of certain military equipment and weapons systems was disallowed. It was also announced that power distribution companies in Union Territories would be privatised.
Prime Minister Narendra Modi had on Tuesday announced a cumulative package of Rs 20 trillion, nearly 10 per cent of the GDP, for the country to become atma-nirbhar, or 'self-reliant', and to boost the sagging economy, hit by the coronavirus-induced lockdown since March 25.
The government's relief package has provided several steps to address issues faced by MSMEs, migrant workers, farmers, shadow banks and power distributers.