Highlights of Finance Minister Nirmala Sitharaman's fifth and final tranche of economic package

New Delhi: The Finance Minister Nirmala Sitharaman on Sunday (May 17, 2020) announced the fifth and the final tranche of the economic package that aims to revive the country's coronavirus-hit economy.

In her opening remarks during the 5th Press Conference on a stimulus package to fight COVID-19 under Aatma Nirbhar Bharat Abhiyaan, FM Nirmala Sitharaman referred to the vision laid out by Prime Minister Narendra Modi in his address to the Nation on May 12, 2020.

Quoting PM Modi, Sitharaman said, "As a Nation, we stand at a very crucial juncture. COVID-19 Pandemic has brought a message and an opportunity. We need now to build an Aatma Nirbhar Bharat."

Announcing the 5th and last tranche of measures towards Government Reforms and Enablers, Sitharaman detailed eight measures for providing employment, support to businesses, Ease of Doing Business, and State Governments as well sectors such as Education and Health.

The eight measures are as follows:

1. Rs 40,000 crore increase in allocation for MGNREGS to provide employment boost
 
The Government will now allocate an additional Rs 40,000 crore under MGNREGS. It will help generate nearly 300 crore person-days in total addressing need for more work including returning migrant workers in Monsoon season as well. Creation of a larger number of durable and livelihood assets including water conservation assets will boost the rural economy through higher production.

2. Health Reforms & Initiatives
 
Public Expenditure on Health will be increased by investing in grass-root health institutions and ramping up Health and Wellness Centres in rural and urban areas. Setting up of Infectious Diseases Hospital Blocks in all districts and strengthening of lab network and surveillance by Integrated Public Health Labs in all districts & block level Labs & Public Health Unit to manage pandemics. Further, National Institutional Platform for One health by ICMR will encourage research and the implementation of National Digital Health Blueprint under the National Digital Health Mission.

3. Technology Driven Education with Equity post-COVID
 
PM eVIDYA, a programme for multi-mode access to digital/online education to be launched immediately. Manodarpan, an initiative for psycho-social support for students, teachers and families for mental health and emotional well-being to be launched immediately as well. New National Curriculum and Pedagogical framework for school, early childhood and teachers will also be launched. National Foundational Literacy and Numeracy Mission for ensuring that every child attains Learning levels and outcomes in grade 5 by 2025 will be launched by December 2020.

4. Further enhancement of Ease of Doing Business through IBC related measures
 
The minimum threshold to initiate insolvency proceedings has been raised to Rs. 1 crore (from Rs. 1 lakh, which largely insulates MSMEs). Special insolvency resolution framework for MSMEs under Section 240A of the Code will be notified soon. Suspension of fresh initiation of insolvency proceedings up to one year, depending upon the pandemic situation. Empowering Central Government to exclude COVID 19 related debt from the definition of “default” under the Code for the purpose of triggering insolvency proceedings.

5. Decriminalisation of Companies Act defaults
 
Decriminalisation of Companies Act violations involving minor technical and procedural defaults such as shortcomings in CSR reporting, inadequacies in Board report, filing defaults, delay in holding of AGM. The Amendments will de-clog the criminal courts and NCLT. 7 compoundable offences altogether dropped and 5 to be dealt with under alternative framework.

 
6. Ease of Doing Business for Corporates

Key reforms include:

- Direct listing of securities by Indian public companies in permissible foreign jurisdictions.

- Private companies which list NCDs on stock exchanges not to be regarded as listed companies.

- Including the provisions of Part IXA (Producer Companies) of Companies Act, 1956 in Companies Act, 2013.

- Power to create additional/ specialized benches for NCLAT.

- Lower penalties for all defaults for Small Companies, One-person Companies, Producer Companies & Start-Ups.
 
7. Public Sector Enterprise Policy for a New, Self-reliant India
 
The government will announce a new policy whereby -

- List of strategic sectors requiring the presence of PSEs in the public interest will be notified.

- In strategic sectors, at least one enterprise will remain in the public sector but the private sector will also be allowed.

- In other sectors, PSEs will be privatized (timing to be based on feasibility etc).

- To minimise wasteful administrative costs, the number of enterprises in strategic sectors will ordinarily be only one to four; others will be privatised/ merged/ brought under holding companies.
 

8. Support to State Governments
 
Centre has decided to increase the borrowing limits of States from 3% to 5% for 2020-21 only. This will give States extra resources of Rs. 4.28 lakh crore. Part of the borrowing will be linked to specific reforms (including recommendations of the Finance Commission). Reform linkage will be in four areas: universalisation of ‘One Nation One Ration card’, Ease of Doing Business, Power distribution and Urban Local Body revenues. 

A specific scheme will be notified by the Department of Expenditure on the following pattern:

- Unconditional increase of 0.50%.

- 1% in 4 tranches of 0.25%, with each tranche linked to clearly specified, measurable and feasible reform actions.

- Further 0.50% if milestones are achieved in at least three out of four reform areas.

 

These were the key highlights from the Finance Minister's announcement for the fifth and final tranche of the economic package.