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Highlights of 5th and final Trench of 20 lakh crore Atmanirbhar Bharat economic package announced by Union Finance Minister, Nirmala Sitharaman on 17-05-2020

editor: gstgyan.co.in

Finance Minister,  Nirmala Sitharaman announced on 17-05-2020 in her final trench of stimulus package to boost the coronavirus COVID-19-hit economy, reforms in seven key areas and also announced an increase in borrowing limit for States from 3 % to 5 %  to give them an additional Rs 4.28 lakh crore. Seven measures covered in today’s announcement are:

1) MNREGA, 2) Health – rural and urban and education, 3)Businesses and COVID19, 4) Decriminalization of Companies Act, 5) Ease Of doing Business, 6) Public Sector Enterprises, 7) State Governments and related resources.

  1. MNREGA – Allotment of additional Rs 40,000 crore to MNREGA scheme for migrants who have gone back to their home States. This is to ensure that these workers find jobs in their home States.
  2. Health (Rural and Urban) and educationTo see the opportunity in this crisis. Health reforms and initiative have been put in place. Investments in grass-root level to be ramped up.
  • All districts to have infectious diseases block in Hospitals.
  • Special emphasis have been given to Hospitals and labs – both privately and publicly funded.
  • 3 channels already earmarked for school education.12 more channels will be added.
  1. Businesses and COVID19Insolvency and Bankruptcy Code (IBC) 
  • Since many businesses were severely affected due to COVID-19, under Insolvency and Bankruptcy Code Debts related to COVID-19 shall not be considered under category of defaults.
  • No fresh insolvency proceedings to be initiated for next 1 year.
  • For Micro, Small and Medium Enterprises (MSMEs), a special insolvency framework will be notified under section 240 A of Insolvency and Bankruptcy Code.
  • Insolvency proceedings limit have been raised to Rs 1 crore from Rs 1 lakh. An ordinance will be moved and it shall be and passed in Parliament once it is in session.
  1. Decriminalization of Companies Act
  • Government had announced compliance deadline extensions to avoid procedural defaults. Now most sections of ​Companies Act will be decriminalise.
  • Compoundable offence can be tried under internal adjudication mechanism rather than going to courts which will also de-clog courts.
  • Further, 7 compoundable offences will be dropped and 5 to be dealt with under alternative framework. An ordinance will be moved to this effect.
  1. Ease of doing business – Corporate affairs – related reforms
  • Companies to directly list securities in foreign jurisdictions.
  • Listing of non-convertible debentures on stock exchange doesn’t make them listed companies.
  1. Public Sector Enterprise Policy
  • Atmanirbhar Bharat needs coherent policies. To open up all sectors to private sectors also. To bring in policies wherein private sector will be allowed to operate in all sectors but public sector enterprises will continue to function.
  • A new policy will be announced by the Government – strategic sector and others. In those notified strategic sectors where public sector is present, at least one public will be present while private will also be allowed to operate. Not more than 4 public sectors to be present in notified sectors. More than 4 will either be merged or brought together.
  1. Support to State governments
  • Revenue deficit grants of Rs 12,390 crore were given on time to States in April and May this year.
  • State Disaster Response Fund (SDRF): Advance funds were released in the first week of April. Rs 11,092 crore.
  • Health ministry has released Rs 4,113 crore to States for funding anti-COVID activities.
  • RBI has increased ways and means to advance limits for states by 60%. Number of days a state can stay in continuous overdraft days increased from 14 days to 21 days and from 32 to 50 days quarterly.
  • Increase of 3% to 3.5% (of state GDP) in states’ borrowing limit is unconditional; they have until now borrowed 14%. Now they have been allowed to borrow 75% in the first half. Next 1% increase to be released in 4 tranches, each one linked with specific reforms.
  • Increasing borrowing limit to 5% from 3% will give an additional Rs 4.28 lakh crore to States.
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