The Union Finance Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman in conference on 17.05.2020 announced 5th and last tranche of measures towards government reforms and enablers. The announcement made is in continuation to the distribution of special economic and comprehensive package of Rs. 20 lakh crores announced by Prime Minister Shri Narendra Modi on 12.05.2020. Smt. Sitharaman said that ‘in order to prove the resolve of Atma Nirbhar Baharat, land, labour, liquidity and laws have all been emphasized in Atma Nirbhar Bharat Package.’ The crisis and the challenge is an opportunity to build a self-reliant India.’
Following are the reforms announced:
- Increase in allocation for MGNREGS to provide employment boost:
The government decided to allocate an additional Rs. 40,000/- crore under Mahatma Gandhi National Rural Employment Guarantee Scheme. The contribution is likely to create large number of durable and livelihood assets including water conservation assets which will boost the rural economy through increase in production.
- Health Reforms and initiatives:
The Public Expenditure on health investment will be increased at grass root level. In all district’s infectious disease hospital block will be set up and the lab network and surveillance will be strengthened by Integrated Public health Lab in all district and block level to manage pandemic. Further, Indian Council of Medical Research will encourage research and implementation of National Digital Health blueprint under the National Digital Health Mission.
- Technology Driven Education with Equity post-COVID:
A program named PM eVIDYA will be launched immediately for multi-mode access to digital/online education. Further, to ensure mental health and emotional wellbeing of students, teachers and families, an initiative called Manodarpan will be launched immediately. Further, New National Curriculum and Pedagogical framework, and National Foundation Literacy and Numeracy Mission is to be launched soon for children education.
- Further enhancement of Ease of Doing Business through Insolvency Bankruptcy Code related measures:
The minimum threshold to initiate insolvency proceedings is raised from one lakh to Rs. 1 crore. Further, special insolvency resolution framework for Micro, Small & Medium Enterprises under section 240 A of Code is soon to be notified.
Further, the Ministry suspended the fresh initiation of insolvency proceedings up to one year depending upon the pandemic situation and empowered Central Government to exclude debt related to COVID-19 from the definition of ‘default’ prescribed in Code for the purpose of triggering insolvency proceedings.
- Decriminalization of Companies Act defaults:
The Ministry has decriminalized compliance of certain proviso of Companies Act, 2013 which involves minor technical and procedural defaults viz. shortcomings in CSR reporting, inadequacies in Board report, filing defaults, delay in holding Annual General Meeting. The amendment will decrease unnecessary burdens on criminal courts and National Company Law Tribunal.
- Ease for Corporates to do business:
The key reforms include:
- Direct listing of securities by Indian public companies in permissible foreign jurisdictions.
- Private companies which list non-convertible debentures on stock exchanges not to be regarded as listed companies.
- Including the provisions of Part IXA (Producer Companies) of Companies Act, 1956 in Companies Act, 2013.
- Power to create additional/specialized benches for National Company Law Appellate tribunal.
- Lower penalties for all defaults for Small Companies, One-person Companies, Producer Companies & Start Ups.
- Public Sector Enterprise policy for a New, Self-reliant India:
The government will soon announce new policy wherein, the list of strategic sectors requiring presence of PSEs in public interest will be notified. In strategic sectors at least one enterprise will remain in public sector, but private sector will also be allowed. To minimize excessive administrative costs, number of enterprises in strategic sectors will ordinarily be only one to four, others will be privatized/merged/brought under holding companies.
- Support to State Government:
The Minister further, announced that the Center has decided to increase the borrowing limits of States from 3% to 5% for 2020-21 only. It will provide States extra resource of Rs. 4.28 lakh crore. The part of the borrowing will be linked to specific reforms including recommendation made by Finance Commission. The reform linkage would be in four areas namely universalization of ‘one nation one ration card’, ease of doing business, power distribution and urban local body revenues. Further, the Department of Expenditure will notify the specific scheme in following pattern:
- Unconditional increase of 0.50%
- 1% in 4 traches 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.
The measures taken by the Centre will help to restore the economy and help the business to grow. Amidst the COVID-19 lockdown the livelihood of individuals has been affected and to mitigate the abovementioned steps taken by the government will surely help to provide security to all those suffering the financial impact of pandemic.