FM announces 5th tranche (last) of economic support under the Aatma Nirbhar Bharat Abhiyaan

In continuation to PM Modi’s announcement of Rs 20 lakh crore boost to the economy, and the announcement made by her on May 13, 2020, May 14, 2020. May 15, 2020 and May 16, 2020 the Finance Minister of India, Smt. Nirmala Sitharaman has made the announcement of the fifth tranche (which is the last one) of economic support the Indian Economy’s fight against COVID-19. These are the announcements made on May 17, 2020.

The 5th tranche is focussed on Government Reforms and Enablers for providing employment, support to businesses, Ease of Doing Business, and State Governments as well sectors such as Education and Health. Seven measures have been announced under this.

1. Allocation for MGNREGS increased by Rs 40,000 Crore to provide employment boost– Will help generate nearly 300 crore person-days in total.

2. Health Reforms & Initiatives- Public Expenditure on Health will be increased by investing in grass-root health institutions. National Institutional Platform for One health by ICMR will encourage research. And the implementation of National Digital Health Blueprint under the National Digital Health Mission.

3. Technology Driven Education with Equity post-COVID-

PM eVIDYA– A programme for multi-mode access to digital/online education to be launched immediately; consisting of:

DIKSHA for school education in states/UTs: e-content and QR coded Energized Textbooks for all grades (one nation, one digital platform)
One earmarked TV channel per class from 1 to 12 (one class, one channel)
Extensive use of Radio, Community radio and Podcasts
Special e-content for visually and hearing impaired.
Top 100 universities will be permitted to automatically start online courses by 30th May, 2020.

Manodarpan– An initiative for psychosocial support of students, teachers and families for mental health and emotional wellbeing to be launched immediately.

National Foundational Literacy and Numeracy Mission for ensuring that every child attains Learning levels and outcomes in grade 5 by 2025 will be launched by December 2020.

4. Further enhancement of Ease of Doing Business through IBC related measures-

Minimum threshold to initiate insolvency proceedings raised to Rs. 1 crore (from Rs. 1 lakh, which largely insulates MSMEs).

Suspension of fresh initiation of insolvency proceedings up to one year, depending upon the pandemic situation.

5. Decriminalisation of Companies Act defaults- The Amendments will de-clog the criminal courts and NCLT. 7 compoundable offences altogether dropped and 5 to be dealt with under alternative framework.

6. Ease of Doing Business for Corporates- Direct listing of securities by Indian public companies in permissible foreign jurisdictions. Power to create additional/ specialized benches for NCLAT. Lower penalties for all defaults for Small Companies, One-person Companies, Producer Companies & Start Ups.

7. Public Sector Enterprise Policy for a New, Self-reliant India- There is a need for a new coherent policy—where all sectors are open to the private sector while public sector enterprises(PSEs) will play an important role in defined areas. Accordingly, the government will announce a new policy whereby,

List of strategic sectors requiring presence of PSEs in public interest will be notified. In strategic sectors, at least one enterprise will remain in the public sector but private sector will also be allowed. In other sectors, PSEs will be privatized (timing to be based on feasibility etc.)

To minimise wasteful administrative costs, number of enterprises in strategic sectors will ordinarily be only one to four; others will be privatised/ merged/ brought under holding companies

The support to State Government from Central Government

States net borrowing ceiling for 2020-21 is Rs. 6.41 lakh crores, based on 3% of Gross State Domestic Product (GSDP).
Centre has decided toincrease borrowing limits of States from 3% to 5% for 2020-21 only. This will give States extra resources of Rs. 4.28 lakh crores.
Part of the borrowing will be linked to specific reforms (including recommendations of the Finance Commission). Reform linkage will be in four areas: universalisation of ‘One Nation One Ration card’, Ease of Doing Business, Power distribution and Urban Local Body revenues.
A specific scheme will be notified by the Department of Expenditure on the following pattern:
- Unconditional increase of 0.50%
- 1% in 4 tranches 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