Context: The PM’s clarion call for a Self reliant India has been followed by a Special economic and comprehensive stimulus package of Rs 20 lakh crore, i.e.equivalent to 10% of India’s GDP.
More on the news:
- While revealing the details, the FM reiterated the vision of the Government that the land, labour, liquidity and laws have all been emphasised in Atma Nirbhar Bharat Package.
- The crisis and the challenge of COVID-19 should be seen as an opportunity to build a self-reliant India.
- These reforms are in continuation to other reforms such as Prime Minister Garib Kalyan Package (PMGKP) that was provided in the beginning of the lockdown.
- As part of the Rs 1.70 lakh crore PMGKP, the Government announced distribution of free food grains, cash payment to women and poor senior citizens and farmers etc.
- On the implementation front, around 41 crore poor people received financial assistance of Rs 52,608 crore under the PMGKP.
- In addition, 84 lakh metric tonnes of food grains has been lifted by States and also more than 3.5 lakh metric tonnes of pulses has been dispatched to various States.
Breaking up the Package
- Going by the centre’s accounting, the total package amounts to almost ₹21 lakh crore.
- The package relies heavily on credit-related measures, including ₹8 lakh crore worth of liquidity enhancing measures by the RBI.
- However the inclusion of RBI’s measures was criticised as it amounted to double counting as the credit guarantee schemes to support small companies and non-banking finance companies would also tap into the RBI’s measures.
Source: The Hindu
5th Tranche of Stimulus Package: Measures towards Government Reforms and Enablers
- Allocation of an additional Rs 40,000 crore for MGNREGA. to provide employment boost.
- It will help generate nearly 300 crore person days in total that will address the need for more work including returning migrant workers in the Monsoon season.
- Creation of a larger number of durable and livelihood assets including water conservation assets holds the potential to boost the rural economy through higher production.
- However, given that States account for 40% of MGNREGA expenditure, including most upfront costs, they will also have to come on board to spend on the scheme.
- Health Reforms & Initiatives
- In order to increase public Expenditure on Health, investment in grass root health institutions and ramping up Health and Wellness Centres in rural and urban areas.
- Infectious Diseases Hospital Blocks will be set up in all districts.
- In turn it will strengthen the lab networks and surveillance by Integrated Public Health Labs in all districts & block level Labs to manage pandemics.
- Further, the National Institutional Platform for One health by ICMR will encourage research.
- Implementation of National Digital Health Blueprint under the National Digital Health Mission.
- Technology Driven Education with Equity post-COVID
- PM eVIDYA, a programme for multi-mode access to digital/online education to be launched immediately.
- It will include e-content for school education, earmarked TV channels for each class from 1 to 12, and online classes by the country's 100 top universities.
- Manodarpan, an initiative for psycho-social support for students, teachers and families for mental health and emotional well-being to be launched immediately as well.
- New National Curriculum and Pedagogical framework for school, early childhood and teachers will also be launched.
- 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.
- Further enhancement of Ease of Doing Business through IBC related measures
- Minimum threshold to initiate insolvency proceedings has been raised to Rs. 1 crore (from Rs. 1 lakh, which largely insulates MSMEs).
- Special insolvency resolution framework for MSMEs under Section 240A of the Code will be notified soon.
- The measures also include fresh initiation of insolvency proceedings up to one year, empowering the Central Government to not count the COVID 19 related debt from the definition of default for the purpose of triggering insolvency proceedings.
- Decriminalisation of Companies Act defaults
- Decriminalisation of Companies Act violations involving minor technical and procedural defaults such as shortcomings in CSR reporting, inadequacies in Board report, filing defaults, delay in holding of AGM.
- The Amendments will de-clog the criminal courts and NCLT as decriminalisation will shift such defaults to internal adjudication.
- 7 compoundable offences altogether dropped and 5 to be dealt with under alternative framework.
- Ease of Doing Business for Corporates
Key reforms include
- Direct listing of securities by Indian public companies in permissible foreign jurisdictions.
- Private companies which list Non-convertible debentures(NCDs) 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 NCLAT
- Lower penalties for all defaults for Small Companies, One-person Companies, Producer Companies & Start Ups.
Disinvestment -No business to be in business
- Public Sector Enterprise Policy for a New, Self-reliant India
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
However this announcement was criticised noting that privatising PSUs would find fewer buyers at a time of global recession.
- Support to State Governments
- The Centre has decided to increase borrowing limits of States from 3% to 5% for 2020-21 only.
- It is particularly important given that GSDPs are likely to contract when States are at the frontline of containment and relief operations.
- This will give States extra resources of Rs. 4.28 lakh crore.
- 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 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.
Non Convertible Debentures (NCDs)
- Such investment options are preferred by the investors that manage liquidity and risks while offering substantial returns.
- Debentures are long-term financial instruments issued by a company for specified tenure with a promise to pay fixed interest to the investor.
- Debentures are of two types, namely convertible debentures and non-convertible debentures (NCD).
- Non-convertible debentures (NCD) are defined as those which cannot be converted into shares or equities.
- NCD interest rates depend on the company issuing the NCD.
- NCD investment can be held by individuals, banking companies, primary dealers, other corporate bodies registered or incorporated in India and unincorporated bodies.
Types of NCDs
- There are two types of NCDs-secured and unsecured.
- A secured NCD is backed by the assets of the company. If the company fails to pay the obligation, the investor holding the debenture can claim that through liquidation of those assets.
- Contrary to this, there is no backing in unsecured NCDs if the company defaults.
Non Compoundable Offences
Charges against the accused can be withdrawn.
The charges against the accused cannot be withdrawn.
The nature of the crime is not so serious.
The nature of the crime is serious.
Offence compoundable by with permission or without permission of the court.
The offence cannot be compounded. It's only quashed.
Impacts an only private person.
Affects both, private people as well as the society at large.
The case is generally filed by a private person.
The case is generally filed by the state.
The PM observed that in order to fulfill the dream of making the 21st century India’s, the way forward is through ensuring that the country becomes self-reliant.
He also talked of the example of PPE kits N-95 masks, whose production in India has gone up from almost being negligible to 2 lakh each, on a daily basis.
What does it mean ?
- The Prime Minister remarked that the definition of self-reliance has undergone a change in the globalized world and clarified that when the country talks about self-reliance, it is different from being self-centered.
- He said that India’s culture considers the world as one family (Vasudhaiv Kutumbkam), and progress in India is part of, and also contributes to, progress in the whole world.
- The Prime Minister remarked that self-reliance will prepare the country for tough competition in the global supply chain.
Five pillars of a self-reliant India
A self-reliant India will stand on five pillars
- Economy, which brings in quantum jump and not incremental change.
- Infrastructure, which should become the identity of India.
- Technologically driven system, based on 21st century technology driven arrangements
- Vibrant Demography, which is our source of energy for a self-reliant India
- Demand, whereby the strength of our demand and supply chain should be utilized to full capacity.
Image Source: The Hindu