FM Sitharaman’s fifth and final tranche: Key Takeaways

Finance minister Nirmala Sitharaman unveiled the final tranche of the mega Covid stimulus today with a focus on ushering in reforms in Companies Act and relaxing the curbs on ease of doing business. The final set of announcements had more for states as their borrowing limit has been increased from 3% to 5% of GSDP.

During the previous four tranches, the finance minister laid the foundation of a more resilient economy with a focus on empowering people to help them earn their livelihoods. The announcements aim at ushering in reforms in sectors where India can attain self-sufficiency and also cut down on imports.

From providing relief to the MSME sector in the first set of announcements to unleashing structural reforms in the key sectors like mining, aviation, defence manufacturing and space in the fourth tranche on Saturday, the finance minister has touched almost all important areas of manufacturing and services where India can become self-reliant.

The Finance Minister also provided much-needed relief to migrant labourers and street vendors through free ration and special credit facility in her second tranche while she announced some substantive steps for upgrading the farm-gate infrastructure and proposed much-needed governance reforms in the third tranche.

Prime Minister Narendra Modi had announced a Rs 20 lakh crore stimulus package amounting to nearly 10 percent of India’s GDP in his last address to the nation.

Key Takeaways:

Because of technology-driven Direct Benefit Transfer, the government transferred money directly into accounts of beneficiaries. Here’s a break up of how much money has been transferred up to May 16, 2020.

-Rs 2000 each has reached 8.19 crore farmers amounting to Rs 16,394 crore

-Under NSAP, the first installment of Rs 1,405 crores and the second installment of Rs 1,402 crore with a target of Rs 3,000 crore achieved

-20 crore Jan Dhan account holding women got Rs 10, 025 crore

-2.2 crore building and construction workers got Rs 3,950 crore

-6.81 free cylinders to beneficiaries have been given under Ujjwala Yojana

-Over 12 lakh EPFO members got online withdrawals of advances

Today, the FM announced seven steps. These are: MGNREGS, health & education, businesses & Covid, decriminalisation of companies act, ease of doing business, PSUs related matters and resources related to state governments.

-MGNREGS: Additional funding of Rs 40,000 crore to the scheme over and above the Budgetary Estimate.

-Health: All districts will have infectious disease hospitals while at the block-level, public health labs will be set up.

-Education: PM eVidya programme to be launched immediately. Each Classroom from 1 to 12 will have one TV channel. Special e-content for visually & hearing impaired. Top 100 universities will be permitted to start online courses by May 30, 2020.

-IBC reforms: Covid-related debt to be excluded from the definition of default under the IBC. No fresh insolvency for the next one year. Minimum threshold to initiate insolvency raised to Rs one crore from Rs one lakh earlier.

-Decriminalising Companies Act: Violations under most of the Companies Act to be decriminalised. This will ease the burden on courts and tribunals. Seven compoundable offences under Companies Act being dropped, 5 offences to be dealt under an alternative framework.

-Listing norms: Companies can now list securities directly in foreign jurisdictions

-New Public Sector Policy: Public sector enterprise policy: All sectors are open to the private sector while public sector enterprises will play an important role in defined areas. Govt will notify strategic areas and in them, at least one PSE will remain but the private sector will be allowed. In other sectors, PSEs will be privatised.

-Additional resources to States: Centre has decided to increase the borrowing limit of states from 3% to 5% for FY21. This will give extra resources of Rs 4.28 lakh crore to states. This despite, states having borrowed only 14% of the limit authorised to them. 86% remains unutilised. The additional borrowing limit has been linked with initiating reforms.

Source: The Economic Times