Key Highlights of the Press Briefing by Finance Minister Nirmala Sitharaman on May 17th 2020

Union Finance Minister Nirmala Sitharaman announced the last tranche of measures of the government’s “atmanirbhar (self-reliant) campaign”.

With a view to revive the economy shuttered by the coronavirus lockdown,

PM Narendra Modi had announced a Rs 20 lakh crore special economic package.

Atma Nirbhar Bharat – Part 5 of the 20L Crore Economic Stimulus Package.

Today’s announcements:

As a nation today we stand at a very crucial juncture; such a big disaster is a signal for India. It has brought a message and an opportunity. We need now to build an Atma Nirbhar Bharat – FM Sitharaman said citing PM Modi’s speech.

Before unveiling the measures, Sitharaman outlined the measures taken by the Modi government to mitigate the hardships faced by citizens due to the lockdown measures.

“PM Garib Kalyan package has been used to provide food for the poor, despite logistical challenges”     – FM Sitharaman

 

  • Pulses given three months in advance, for which FM Sitharaman hails FCI, NAFED, state governments
  • Direct Benefit Transfers played an important role
  • FM Sitharaman appreciates the role of Direct Benefit Transfers in providing following relief
  • 8.15 crore farmers received benefits with DBT transfers
  • 20 cr women Jan Dhan accounts credited
  • 2 .2cr building workers given money because of DBT
  • 6.81 Ujjwala cylinders reached beneficiaries
  • 12 lakh EPFO members benefited from non-refundable advance

 

Reforming Governance for Ease of Doing Business

  • Globally, potential investors look at a country’s Doing Business Report (DBR) ranking
  • India’s position in World Bank’s Doing Business Report rank has improved from 142 in 2014 to 63 in 2019
  • Processes such as granting of permits and clearance, self-certification and third party certification among others have been streamlined.
  • Government is working on a mission mode on the next phase of Ease of Doing Business Reforms relating to easy registration of property, fast disposal of commercial disputes and simpler tax regime for making India one of the easiest places to do business
  • In the First phase of decriminalization of Company Law defaults in 2018, 16 compoundable offences were shifted to an in-house adjudication & penalty mechanism
  • Integrated Web based Incorporation Form – Simplified Proforma for Incorporating Company Electronically Plus (SPICe +) introduced.
  • Databank of Independent Directors launched
  • Withdrawal of more than 14,000 prosecutions under the Companies Act, 2013.
  • Reduced compliance burden under Companies Act 2013 due to Covid19

 

Today’s announcement on 7 major areas in the final tranche.

  • Increase in allocation for MGNREGS to provide employment boost.
    • Budget estimate was Rs 61,000 crores
    • Additional Rs 40,000 crores allotted
    • Job security for farmers during monsoon
    • Will help generate nearly 300 crore person days in total which will help to boost the rural economy through higher production.
    • Creation of larger number of durable and livelihood assets including water conservation assets.
  • Healthcare & education
    • Health-related steps that have been undertaken
    • Rs 15,000 crore was released
    • Insurance cover of Rs 50 lakhs per person for health professionals
    • Made sure telemedicine comes into play
    • Epidemic Diseases Act was amended for protection of health care workers\
  • Getting ready for future health emergencies
    • Ramping up the health infrastructure
    • All districts to have infectious diseases block
    • Public health labs to be set up in all districts at the block level
  • Tech-driven education for all
    • PM e-Vidya programme for multi-mode access
    • One nation one digital facility under DIKSHA for school education –
    • e-content and QR coded Energized Textbooks for all grades
    • One year-marked TV channel for every class from class 1 to 12 (one class, one channel)
    • Extensive use of Radio, Community radio and Podcasts
    • Special e-content for Divyang children
    • Top 100 universities will automatically be allowed to start online courses by May 30, 2020
  • Manodarpan
    • An initiative for psychosocial support of students, teachers and families for mental health and emotional wellbeing to be launched immediately.
  • Business during Covid
    • Big boost for struggling businesses
    • Debts related to Covid will be excluded from default under IBC
    • No fresh insolvency case will be initiated for up to a year
    • For MSMEs, a special insolvency framework will be notified
    • Minimum threshold for insolvency raised from Rs 1 lakh to Rs 1 crore
  • Decrimilisation of Companies Act defaults
    • 7 compoundable offences altogether dropped and 5 to be dealt with under alternative framework
    • Decriminalisation of violations under Companies Act of minor technical and procedural defaults
    • These amendments to de-clog the ciriminal courts and NCLT
  • Ease of doing business
    • This will help companies to directly list their securities in foreign jurisdiction
    • Private companies which list non-convertible debentures on stock exchange not to be regarded as listed companies
    • Lower penalty for defects for Small Companies, One Person Companies, startups and Producer Companies (under provisions of part IX of Companies Act)
  • PSUs and policies
    • New Public Sector Enterprise Policy introduced

All sectors to be now open for private players

    • List of strategic sectors requiring the presence of PSEs in public interest will be notified
    • In strategic sectors, at-least one enterprises will remain in the public sector but the private sector will also be allowed
    • In other sectors, PSEs will be privatised
    • To minimize wasteful administrative costs, the number of enterprises in strategic sectors will be between one to four, others will be privatised or merged or brought under holding companies.
  • State govt and resources
    • Centre has decided to increase borrowing limit of states from 3% to 5% for FY21. This will give extra resources of Rs 4.28 lakh crore to states
    • Part of the borrowing will be linked to specific reforms

 

Reform linkage will be in four areas

  • One Nation One Ration Card
  • Ease of Doing Business
  • Power distribution
  • Urban local body revenues
  • A specific scheme will be notified by the Department of Expenditures
  • Unconditional increase of 0.50%
  • 1% in 4 tranches of 0.25% with each tranche linked to clearly specified, measurable and feasible reform actions
  • 5% of milestones are achieved in at least three out of four reform areas

 

Where did the Rs 20 lakh crore go?

FM answers-

 

Earlier measures:               Rs.1,92,000 crore

Tranche 1:                            Rs.5,94,550 crore

Tranche 2:                            Rs.3,10,000 crore

Tranche 3:                            Rs.1,50,000 crore

Tranche 4+5:                       Rs.48,100 crore

RBI measures:                     Rs.8,01,603 crore

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Total:                                 Rs.20,97,053 crore

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“India will emerge stronger from the crisis” – Finance minister

Last tranche of stimulus package offers succour to India Inc; props up healthcare and education

The economic stimulus is intended to provide relief during the COVID-19 outbreak and the consequent nationwide lockdown.

We hope the implementation of these steps are done within this crisis period to help the businesses across various industries get back on their feet in the  quickest possible time, given the challenges of social distancing and safety norms being stipulated by the government and local authorities.

We are hopeful that this tough time will also pass and bring more opportunity for growth for our economy.

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