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Reforms to be focus of 5th and final tranche of economic stimulus package: FM Nirmala Sitharaman

PTI | Updated on May 17, 2020

Finance Minister Nirmala Sitharaman on Sunday said reforms will be the focus of the fifth and final tranche of economic stimulus package to deal with the economic fallout of the COVID-19 pandemic.

She said the 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.

Govt allocates additional Rs 40,000 cr over and above Rs 61,000 cr budgeted for MGNREGS to generate more jobs.

No fresh insolvency to be initiated for 1 yr; COVID-19 related debt to be excluded from definition of default.

The Finance Minister said that minimum threshold to initiate insolvency proceedings raised to Rs 1 crore from Rs 1 lakh to benefit MSMEs.

Companies allowed to directly list securities in permissible foreign jurisdictions.

Pvt companies which list non-convertible debentures on stock exchanges not to be regarded as listed firms.

New PSU policy to be announced; to define strategic sectors where PSUs will be present, others will be privatised/merged.

Govt to privatise non-strategic PSUs.

Borrowing limit of states raised from 3 pc of Gross State Domestic Product to 5 pc in 2020-21; to make available Rs 4.28 lakh cr extra.

FM says Rs 20 lakh cr economic stimulus includes Rs 8.01 lakh crore of liquidity measures by RBI and Rs 1.92 lakh cr package in March.

1st tranche of stimulus this month amounted to Rs 5.94 lakh cr; 2nd Rs 3.10 lk cr; 3rd Rs 1.50 lk cr and Rs 48,100 cr in 4th, 5th tranches.

During the coronavirus-induced lockdown, Rs 16,394 crore has been paid to 8.19 crore farmers under the Rs 2,000 free cash dole scheme of PM Kisan, she said.

Old-age beneficiaries and others have been paid first instalment of Rs 1,405 crore and a second one of Rs 1,402 crore.

She allso said that as much as Rs 10,025 crore has been transferred to 20 crore women Jan Dhan account holders. Also, 6.81 free LPG cylinders have been given to poor.

Further to this, the government last week announced a cumulative package of Rs 10.73 lakh crore, mostly in liquidity measures with negligible extra-budget spending. The measures included a variety of steps for small businesses, street vendors, farmers and poor migrants as well as shadow banks and electricity distributors, but they have largely been either credit guarantee schemes or new fund creations to be shouldered by banks and financial institutions.

The government’s cash outgo is limited to a maximum of Rs 18,500 crore on free foodgrain and affordable housing to migrant workers as well as limited tax relief and marginal dole to some companies on employee retiral benefits.

On Saturday, the government announced a hike in foreign investment limit in defence manufacturing and opened up space facilities while giving a new push to reforms of commercial coal mining, mineral block auction and privatisation of power distribution as it sought new investments to help shore up an economy hit by the coronavirus pandemic.

Last week, Prime Minister Narendra Modi announced a cumulative package of Rs 20 lakh crore, nearly 10 per cent of GDP, to provide relief to various segments of the economy battered by the nationwide lockdown in the wake of the coronavirus pandemic.

While this included March 27 announcement of Rs 1.7 lakh crore package of free foodgrain and cash to poor for three months and RBI’s Rs 5.6 lakh crore worth of monetary policy since March, the government in three tranches over the last three days announced a cumulative package of Rs 10.73 lakh crore.

The measures announced have largely been about liquidity with negligible extra budget spending.

The three tranches provided for a variety of steps for small businesses, street vendors, farmers and poor migrants as well as shadow banks and electricity distributors, but they have largely been either credit guarantee schemes or new fund creations to be shouldered by banks and financial institutions.

The government cash outgo is limited to a maximum of Rs 18,500 crore on free foodgrain and affordable housing to migrant workers as well as limited tax relief and marginal dole to some companies on employee retiral benefits.

Beginning March 25, India imposed a three-week-long nationwide lockdown, the most far-reaching measure undertaken by any government to curb the spread of the pandemic.

The lockdown, which brought most of the economic activities to a standstill as factories and businesses were shut while rendering thousands temporarily unemployed, has since been extended twice through May 17, with some relaxations to allow resumption of economic activities.

According to estimates, the lockdown may have led to 12.2 crore people losing jobs in April and consumer demand evaporating.

Published on May 17, 2020

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