FM Nirmala Sitharaman announces last tranche of reforms & enablers

Finance Minister Nirmala Sitharaman, on Sunday, announced the fourth and last tranche of government reforms
FM Nirmala Sitharaman announces last tranche of reforms & enablers

MAJOR TAKEAWAYS

 PSE Policy for a new, self-reliant India

 Ease of Doing Business for Corporates

 Technology Driven Education with Equity

 Decriminalisation of Companies Act defaults

 Rs 40,000 crore increase in allocation for

MGNREGS to provide employment boost

 Increase borrowing limits of States from 3% to 5% for 2020-21 only & promoting State level reforms

 Increased investments in Public Health and other health reforms to prepare India for future pandemics

 Further enhancement of 'Ease of Doing Business' through IBC related measures

NEW DELHI: Finance Minister Nirmala Sitharaman, on Sunday, announced the fourth and last tranche of government reforms and enablers across seven sectors under 'Aatma Nirbhar Bharat Abhiyaan' or 'Self-Reliant India Movement'. It is as per Prime Minister Narendra Modi 'Special economic and comprehensive package of Rs 20 lakh crore - equivalent to 10% of India's GDP on May 12, 2020. He outlined the following five pillars of Atmanirbhar Bharat: Economy, Infrastructure, System, Vibrant Demography and Demand.

In her opening remarks during the fifth press conference here on Sunday on the stimulus package to fight COVID-19, the Union Minister of Finance & Corporate Affairs Nirmala Sitharaman referred to the

vision laid out by Prime Minister. Quoting the Prime Minister, Sitharaman said that "as a nation, we stand at a very crucial juncture. The COVID-19 pandemic has brought a message and an opportunity. We need now to build an 'Aatma Nirbhar Bharat'.

Sitharaman said that in order to prove the resolve of 'Aatma Nirbhar Bharat', land, labour, liquidity and laws have all been emphasised the package. The crisis and the challenge is an opportunity to build a self-reliant India.

The Finance Minister said that Sunday's announcement is in continuation in the series of reforms. "Soon after lockdown, we came up with Prime Minister Garib Kalyan Package (PMGKP). As part of the Rs 1.70 lakh crore PMGKP, the government announced distribution of free food grains, cash payment to women and poor senior citizens and farmers among others. The swift implementation of the package is being continuously monitored. Around 41 crore poor people received financial assistance of Rs 52,608 crore under the PMGKP. The Finance Minister also said that PMGKP used technology to do 'Direct Benefit Transfer' (DBT) to people. We could do what we did because of the initiatives taken during the last few years," she added.

In addition, 84 lakh metric tonnes of food grains have been lifted by the States and more than 3.5 lakh metric tonnes of pulses have been dispatched to various States. And for this, Sitharaman appreciated the concerted efforts of FCI, NAFED and the States, despite logistical challenges.

The Finance Minister concluded by providing a breakup of the stimulus measures provided so far in order to become Aatma Nirbhar Bharat.

Announcing the fifth and last tranche of economic measures towards government reforms and enablers, Minister Sitharaman detailed the following seven measures for providing employment, support to businesses, 'Ease of Doing Business' as well as sectors such as Education and Health besides providing leverage to the States in many aspects.

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 the need for more work including utilizing the returning migrant workers in the monsoon season. Creation of a larger number of durable and livelihood assets including water conservation assets will boost the rural economy through higher production, the Union Minister stated.

2. HEALTH REFORMS & INITIATIVES: Public expenditure on the Health sector will be increased by investing in grassroot health institutions and ramping up 'Health and Wellness Centres' in both the rural as well as the 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 and block-level labs and 'Public Health Units' to manage pandemics. Further, a 'National Institutional Platform for One health' by ICMR will encourage research. The package also mentioned of 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 will be launched immediately. Manodarpan, an initiative for psycho-social support for students, teachers and families for mental health and emotional wellbeing will be also launched immediately. a '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.

The measures also mentioned of the suspension of fresh initiation of insolvency proceedings up to one year, depending upon the pandemic situation. It further empowered the 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. Altogether seven compoundable offences have been altogether dropped and five other are to be dealt with under an alternative framework.

6. EASE OF DOING BUSINESS FOR CORPORATES: The key reforms include the following five steps:

• 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 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 & StartUps.

7. PUBLIC SECTOR ENTERPRISE POLICY FOR A 'NEW, SELF-RELIANT INDIA': The Central government will announce a new policy whereby the following will be ensured:

• List of strategic sectors requiring presence of PSEs in 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, 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: The Centre has decided to increase 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 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. (PIB) 

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