No fresh insolvency to be initiated for a year; COVID-19 related debt to be excluded from definition of default.
On the last day of stimulus package announcements, FM Nirmala Sitharaman on May 17 unveiled a set of measures expected to give India Inc some breathing space amid the COVID-19 disruption.
The seven areas in focus in today's announcements were MGNREGA, healthcare and education, business during COVID-19, decrimilisation of Companies Act, Ease of Doing Business, PSUs and state government and resources.
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.
"Around 20 crore Jan Dhan account holders have got a total of Rs.10,000 crore as of May 16. All the payments under PM Garib Kalyan Yojana were done online and was possible only because of the DBT system developed in the last four years. 6.81 crore people got free LPG cylinders and 12 lakh EPFO holders got online withdrawal of advance," Sitharaman said.
In a major move aimed to help India Inc tide over the COVID-19 crisis, Sitharaman said companies can now directly list their securities in foreign jurisdictions.
"Private companies which list NCDs on stock exchanges won't be regarded as listed companies," she said.
Sitharaman said majority of compoundable offences under Companies Act will be shifted to an internal adjudication mechanism. Sections 7,9 and 10 of IBC will be amended through an Ordinance that will enable suspension of IBC proceedings for a year against companies that default on loan repayments.
Companies Act violations like shortcoming in CSR reporting, inadequacies in board report and delays in holding AGMs are set to be decriminalised.
Announcing another major reform, Sitharaman said the government will announce a new public sector policy.
"A list of strategic sectors requiring presence of PSEs in public interest will be notified. In strategic sectors, at least one enterprise to remain in public sector but private sector to be allowed. In other sectors, PSEs will be privatised," she said.
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For MSMEs, the minimum threshold to initiate insolvency proceedings has been raised to Rs 1 crore from Rs 1 lakh and there will be a special insolvency resolution for them under IBC.
States, battling a fund-crisis, have also been handed a lifeline with the Centre increasing the borrowing limit.
"Centre has decided to increase borrowing limit of states from 3 percent to 5 percent for FY21. This will give extra resources of Rs 4.28 lakh crore to states. The states have seen a sharp decline in revenue. We have consistently extended help to the states. Revenue deficit grants to the tune of Rs 12,390 crore given on time in April and May despite Centre's stressed resources," said Sitharaman.
The FM also hiked spending on MGNREGS as government looks to mitigate the hardhsips faced by migrant workers.
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"The Budget Estimates for MGNREGS was Rs 61,000 crore. Government will now allocate an additional Rs 40,000 crore. This will help generate nearly 300 crore person days in total. This will also help provide more work, including for returning migrant workers," said Sitharaman.
Harnessing technology for ensuring dissemination of educational activities, Sitharaman announced a slew of measures.
"The PM eVIDYa programme for multi-mode access to digital/online education to be launched immediately. Top 100 universities will be permitted to automatically start online courses by 30th May 2020. One nation one digital facility under DIKSHA for school education," she said.
She said there will also be one TV channel for every class and and special e-content for Divyang children.
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"Swayam Prabha DTH channels have been launched to support and reach those who do not have access to the internet and 12 channels will be added," she said.
In a move aimed at boosting the healthcare sector, there will be insurance cover of Rs 50 lakh per person for health professionals.
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"The government has taken a number of health-related steps for COVID-19 containment- Rs 15000 crore announced for states, essential items and testing labs alongwith rolling out of teleconsultation services, launch of Arogya Setu app and protection to healthcare workers with adequate PPEs. Health expenditure will be increased investment at the grassroots will be ramped up for health and wellness centres, with particular focus on aspirational districts. All districts will have infectious diseases block in hospitals. Public health labs will be set up at block levels," she said.
Sitharaman said the reform linkage will be in four areas — One Nation One Ration Card, Ease of Doing Business, power distribution and urban local body revenues.
Here's a break-up of the Rs 20 lakh crore stimulus package:
- 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
Total: Rs 20,97,053 croreFollow our full coverage of the coronavirus outbreak here