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The fifth and final tranche of the Atmanirbhar Bharat Abhiyan stimulus package, announced by Finance Minister on 17th May 2020.
The total package amounts to almost ₹21 lakh crore by the Centre’s accounting, but is heavy on credit-related measures, including ₹8 lakh crore worth of liquidity enhancing measures by the RBI.
Highlights of the Fifth Tranche
- The Fifth Tranche included an additional ₹40,000 crore allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
- It also included a new policy welcoming private companies into every sector of industry, while limiting public sector enterprises to strategic sectors only.
- Corporate enterprises were also offered some relief via changes to the Insolvency and Bankruptcy Code (IBC) and the Companies Act.
- The Centre has agreed to demands from States to hike their borrowing limits from 3% to 5% of their GDP in light of the COVID-19 crisis, but on the condition that they implement specific reforms.
Empowering MGNREGS and States
- The decision to allocate ₹40,000 crore to the MGNREGS scheme in addition to the ₹61,000 crore allocated in the Budget is a measure that will support rural livelihoods at a time when returning migrants swell unemployment in the villages.
- Since, States account for 40% of MGNREGS expenditure, including most upfront costs, they will also have to be willing to spend on the scheme.
- State governments have been given more fiscal room in the current crisis with the hiking of their borrowing limits from 3% to 5% of Gross State Domestic Product (GSDP), which is particularly important as GSDPs are likely to contract, further shrinking possible borrowing at a time when States are at the frontline of containment and relief operations.
- The hiked limits will be conditional on States implementing reforms related to ration portability, ease of doing business, power distribution, and urban local bodies.
- The new policy will notify specific strategic sectors in which at least one PSU will remain, although private companies will also be allowed. PSUs in all other sectors will be privatised.
- Even in the strategic sectors, no more than four PSUs will be allowed, with the rest being privatised, merged or brought under holding companies.
Relief to protect defaults
- Other announcements included changes to the IBC, to ensure that COVID-19 related debts will not be counted as defaults for the purpose of triggering insolvency proceedings. No bankruptcy proceedings will be initiated for a year.
- MSMEs will get a special framework to insulate them from insolvency, including a raised threshold of ₹1 crore.
- Already proposed amendments to the Companies Act, meant to decriminalise violations or shift them to internal adjudication, will now be pushed through the ordinance route.
The reforms announced promised increased public expenditure including infectious disease hospital blocks in every district and public laboratories in every block, without mentioning any specific financial outlay.
The Centre will also roll out the PM e-Vidya programme for multi-mode access to digital education, including e-content for school education, earmarked TV channels for each class from 1 to 12, and a previously announced plan to let the country’s 100 top universities begin online classes by the end of the month.
-Source: The Hindu