Stimulus-cum-Reform: More MGNREGS days, mega privatisation drive announced

May 17, 2020

New Delhi: To mitigate the economic fallout of COVID-19 outbreak, Finance Minister Nirmala Sitharaman on Sunday announced a mega stimulus push for education, health and rural employment along with a roadmap for a massive privatisation and merger drive of public sector undertakings in certain areas.

Accordingly, on the fifth and the final day of detailing the mega Rs 20 lakh-crore economic package under the Centre’s ‘Self-Reliant India Movement’, the minister also eased regulatory norms on insolvency norms and listing norms.

The minister also gave a monetary break-up of all the measures she announced during the last 5-days. These are cumulatively worth Rs 20,97,053 crore announced under the mega stimulus package which also includes RBI measures and steps announced under Pradhan Mantri Garib Kalyana Package (PMGKP).

On Sunday, she announced additional allocation of Rs 40,000 crore under the Mahatma Gandhi National Rural Employment Guarantee scheme (MGNREGS).

In the Union Budget 2020-21, the government had allocated Rs 61,500 crore for MGNREGS, and the additional Rs 40,000 crore will be over and above this budget estimate (BE), she said.

This additional amount is expected to generate nearly 300 person days of employment in total.

Significantly, the decision will aide scores of migrant workers who have left for their villages find employment.

But the biggest annnouncement was on the new Public Sector Enterprise Policy, and opening up of all sectors to private players.

Sitharaman said that under the new policy, a list of strategic sectors requiring presence of PSEs in public interest will be notified and in these sectors, at least one enterprise will remain in the public sector and private sector will also be allowed to operate.

Notably, Sitharman announced that in the other, non-strategic sectors, all public sector units will be privatised. The timing of the privatisation will depend on feasibility and other factors, she added.

Furthermore, the minister gave a major relief for businesses by easing insolvency norms.

The minister announced that no fresh insolvency case will be admitted for the next one year. The Centre had earlier suspended any fresh admission for six months.

Similarly, Centre will also set up a special insolvency framework for MSMEs. The threshold for insolvency will also be raised to Rs 1 crore from the current Rs 1 lakh which will be supportive for the MSME sector.

In another set of reform measures announced on Sunday minor technical and procedural defaults under the Companies Act were decriminalized.

The decriminalised violations include shortcomings in CSR reporting, inadequacies in board report, filing defaults, delay in holding of annual general meetings.

Besides, seven compoundable offences will be dropped, while five offences will be dealt with under alternative framework.

In terms of the monetary break-up, she listed measures worth Rs 20,97,053 crore including RBI measures and steps announced under PMGKP.

Under the break-up, on the first day announcements with allocations worth Rs 5,94,550 crore were made, while on the second day steps on agriculture, housing, rural sectors worth Rs 3,10,000 crore were made.

Another Rs 1,50,000 crore were allocated for several schemes to revive agriculture and allied sectors amongst others on the third day.

On the fourth and the fifth day, the FM gave a mega push to boost mining, defence, civil aviation and power distribution sectors via structural reforms and stimulus worth Rs 48,100 crore.

Consequently, these steps come to a total of Rs 11,02,650 crore.

The package also include earlier announcements under PMGKP worth Rs 1,92,800 crore and RBI measures including Rs 8,01,603 crore which come to Rs 9,94,403 crore.

These announcements were made under Prime Minister’s mega stimulus package a mounting to 10 per cent of the gross domestic product (GDP). IANS