Nirmala Sitharaman Highlights: PSU merger, private sector reforms; FM gives breakup of Rs 21 lakh crore stimulus

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Updated: May 18, 2020 9:47:35 am

Nirmala Sitharaman Highlights | Final Tranche of Economic Package: Finance Minister Nirmala Sitharaman announced public sector enterprise policy among seven major steps in her fifth tranche of announcements. The government has allocated an additional Rs 40,000 crore under MNREGA scheme

Nirmala Sitharaman live Press ConferencePress Conference by FM Nirmala Sitharaman Highlights

Nirmala Sitharaman Highlights | Final Tranche of Economic Package: Finance Minister Nirmala Sitharaman’s fifth and last tranche of the Rs 20 lakh crore special economic package focused on the consolidation of PSUs, make the environment conducive for the private companies as to boost ease of doing business, and an additional allocation of Rs 40,000 crore under MNREGA scheme. Besides, the other announcements were related to health, businesses and COVID-19, decriminalisation of Companies Act, and state governments. Under IBC related matters, FM Sitharaman said many businesses have been severely affected by lockdown. The debts related to COVID-19 shall be excluded from defaults under IBC. Also, the minimum threshold to initiate insolvency proceedings has been raised to Rs 1 crore from Rs 1 lakh. Moreover, no fresh insolvency proceeding will be initiated up to 1 year. Government has also decided to increase the borrowing limit of states from 3 per cent to 5 per cent for FY21, which will give an extra resources of Rs 4.28 lakh crore to states. Fm Sitharaman also provided the breakup of nearly Rs 21 lakh crore special economic package. Where the value of the first tranche of the stimulus was Rs 5.95 lakh crore, the second tranche amounts to Rs 3.1 lakh crore and the amount of the third stimulus was Rs 1.5 lakh crore. While the fourth and fifth tranche were equal to Rs 48,000 crore including Rs 40,000 crore additional spending on MNREGA. However, the stimulus from earlier measures were equal to Rs 1,92, 800 crore

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Highlights

    19:48 (IST)17 May 2020
    Private firms won't have to comply with corporate governance standards applicable to listed companies

    Private companies who undertake listed issuances will no longer be considered as listed companies. As a result, private companies do not have to comply with corporate governance standards applicable to listed companies like setting up audit committees or having independent directors. There will also be relaxations in relation to related party transactions. Further, ongoing disclosures required to be made by them will be less onerous - Leena Chacko, Partner, Cyril Amarchand Mangaldas

    19:10 (IST)17 May 2020
    Policy of limiting number of PSEs in one sector to a maximum of four may be an uphill task

    The policy regarding public sector enterprises (PSEs) should be finalized in consultation with the states since there are a large number of state-level PSEs. The choice of sectors earmarked as public enterprise sectors would depend on their strategic importance. The policy of limiting the number of PSEs in one sector to a maximum of four may prove to be an uphill task since, at present, there are many sectors where the number of CPSEs is quite large - D.K. Srivastava, Chief Policy Advisor, EY India.

    18:42 (IST)17 May 2020
    Restaurant sector staring at large scale shutdown of businesses, massive loss of employment

    We are very sad and extremely disappointed that the Hon'ble Finance Minister chose to completely ignore this (restaurant) sector in these five days of announcements of the stimulus package. Now, we are staring at a large scale close down of businesses and massive loss of employment in the sector. With the imminent closure of many F&B Establishments, this will certainly cause a long-term impact on the farming sector - Anurag Katriar, President of NRAI

    18:14 (IST)17 May 2020
    Government should have provided direct demand stimulus for beleaguered real estate sector

    The announcements have provided for an extension of CLSS scheme and an extension of deadline by six months under RERA for registered projects as a relief to the real estate sector. We also hope that the partial Credit Guarantee to NBFCs and HFCs will enhance liquidity support and to assuage risk concerns of lenders, thereby help the sector to remain positive during this crisis. Overall, we feel disappointed that no direct demand stimulus was announced that could have benefited the beleaguered sector - Shishir Baijal, Chairman & Managing Director, Knight Frank India.

    17:27 (IST)17 May 2020
    Actual fiscal impact on the budget to be only 0.75 per cent of GDP

    Accounting for the support measures unveiled yesterday (Rs 81bn), and today (Rs 400bn), we estimate that the government's fiscal support programme totals Rs 21trn, which includes Rs 8trn of measures announced by the RBI. However, we estimate that the actual fiscal impact on the budget will be only Rs 1.5trn (0.75% of GDP), based on our calculations and assumptions made during the series of announcements - Rahul Bajoria, Chief India Economist, Barclays.

    16:53 (IST)17 May 2020
    Public Sector Enterprises Policy for privatizing PSUs could unlock great value if govt acts swiftly on it

    A welcome announcement was about notification of a list of strategic sectors requiring the presence of PSEs in the public interest. In strategic sectors, at least one enterprise will remain in the public sector but the private sector will be allowed. In other sectors, PSEs will be privatized. If this bold announcement is quickly transmitted into action, then it could unlock a lot of value -Dhiraj Relli, MD & CEO, HDFC Securities

    16:03 (IST)17 May 2020
    Need to see the effect in addressing liquidity concerns for farmers, daily wagers besides fixing confidence improvement

    We need to see the effect of these announcements in addressing some immediate liquidity concerns especially for farmers, and daily wagers besides fixing the medium and long term improvement of confidence. The immediate confidence-boosting measures are sure to encourage the investment cycle allowing industries to take additional loans from banks which recently have been flushed with funds and parking the additional capital only with RBI - Lohit Bhatia, President, Indian Staffing Federation

    15:36 (IST)17 May 2020
    FM Sitharaman: No insolvency cases against MSMEs for 1 year; Covid-related debt excluded from defaults

    Finance Minister Nirmala Sitharaman announcing the fifth tranche of the Rs 20 lakh crore economic package on Sunday extended the initiation period of fresh insolvency proceedings against MSMEs by six months to up to one year depending upon the Covid situation. The minister added that Covid-19 related debt would be excluded from the ‘default’ category under the Code to further enhance ease of doing business.Read full story

    14:57 (IST)17 May 2020
    MGNREGA gets more money; FM Sitharaman will spend this much to provide jobs during monsoon season

    In a major push to generate more job opportunities in rural India, especially during the upcoming monsoon season, Finance Minister Nirmala Sitharaman today announced an additional allocation of Rs 40,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The government had allocated Rs 61,000 crore for MNREGA in the budget for the current fiscal announced on February 1, 2020. Read full story here

    14:53 (IST)17 May 2020
    Today's move on public sector policy aimed at getting the best out of our national assets

    The announcement on the public sector policy spells out the role of the government-owned companies within a broad framework of strategic sectors and it would help both the private sector and the state-owned firms as there is no conflict between the public and private sector, said Assocham Secretary general Deepak Sood. It is a move aimed at getting the best out of our national assets, whether they are in the public or private sector, he added.

    14:35 (IST)17 May 2020
    FM Sitharaman paves way for PSU mergers, privatisation; opens all sector opportunities for private cos

    Finance Minister Nirmala Sitharaman has paved the way for opening up of all sectors to private companies, while allowing for consolidation of the PSU companies (public sector utilities) into only strategic sectors, to be notified. Further, each of such notified strategic areas will have a maximum of four PSUs, and the remaining state-run companies would be either merged or privatised. The move could trigger a series of mergers, and disinvestment, sale and privatisation of state-run companies in the coming months and years. Nirmala Sitharaman said that limiting the number of PSUs in each sector would minimise wasteful administrative costs.

    Read full story

    14:34 (IST)17 May 2020
    MGNREGA gets more money; FM Sitharaman will spend this much to provide jobs during monsoon season

    In a major push to generate more job opportunities in rural India, especially during the upcoming monsoon season, Finance Minister Nirmala Sitharaman today announced an additional allocation of Rs 40,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The government had allocated Rs 61,000 crore for MNREGA in the budget for the current fiscal announced on February 1, 2020. With a lot of workers migrating back to their villages, the government has made provisions so that they can also join in the scheme from their hometowns, if they want to enrol in MGNREGA

    Read full story

    14:19 (IST)17 May 2020
    FM Sitharaman paves way for PSU mergers, privatisation; opens all sector opportunities for private cos

    Finance Minister Nirmala Sitharaman has paved the way for opening up of all sectors to private companies, while allowing for consolidation of the PSU companies (public sector utilities) into only strategic sectors, to be notified. Further, each of such notified strategic areas will have a maximum of four PSUs, and the remaining state-run companies would be either merged or privatised. Read full story here

    13:24 (IST)17 May 2020
    Govt's move may hamper recovery prospects of Financial Institutions in cases of existing defaults

    Proposal to Increase the threshold limit to initiate proceedings under IBC from the existing limit of Rs. 1 lakh to Rs. 1 crore, exclusion of default due to COVID-19 and barring initiation of new insolvency cases for next 1 year will surely benefit corporate entities who genuinely want to pull themselves out of an economic slump or slowdown but will ultimately hamper the recovery prospects of Financial Institutions in cases of existing defaults by a Corporate entity and in those cases as well where the accounts have already been declared as NPAs - Sumit Batra, a corporate lawyer.

    12:55 (IST)17 May 2020
    Many questions on MSMEs remain unanswered

    While the MSME amendments have given some breathing space to the sector, the blanket suspension of defaults on account of COVID could lead to unintended consequences. Questions like why should an entity not refer itself to insolvency, what is the parallel regime of the resolution, recovery steps are not curtailed and therefore will continue to rise, what is the framework for creditors to come up with a viable resolution plan outside of IBC, continue to remain unanswered - Veena Sivaramakrishnan, Partner, Shardul Amarchand Mangaldas & Co.

    12:52 (IST)17 May 2020
    Core issues more important than looking at budget

    FM SItharaman asks media to look into core issues, instead of the effect on the annual budget.  

    12:47 (IST)17 May 2020
    Nirmala Sitharaman slams opposition on migrant workers issues

    FM Sitharaman pleads Congress party to work together for migrant workers, instead of just criticising. 

    12:43 (IST)17 May 2020
    IBC related matters

    Minimum threshold to initiate insolvency proceedings raised to Rs 1 cr from Rs 1 lakh and no fresh insolvency proceedings will be initiated for one year, depending on the pandemic situation.

    12:39 (IST)17 May 2020
    Break up of government's measures reaches Rs 21 lakh crore

    FM Nirmala Sitharaman gives break up of Rs 21 lakh crore in economic package 2.0

    12:36 (IST)17 May 2020
    Nirmala Sitharaman gives break up of Rs 20 lakh crore economic package

    Value of Part 1 stimulus- Rs 5.95 lakh crore, including Rs 3 lakh crore emergency working capital facility for MSMEs, business; Rs 90,000 crore liquidity infusion for DISCOMS

    Part 2 stimulus worth Rs 3.1 lakh crore total, including, Kisan Credit Card additional credit Rs 2 lakh crore

    Part 3 stimulus worth Rs Rs 1.5 lakh crore, including Rs 1 lakh crore agriculture infrastructure fund

    Part 4 and 5 stimulus worth Rs 48,000 crore, including Rs 40,000 crore additional spending on MNREGA

    The total is Rs 20,97,053 crore.

    12:32 (IST)17 May 2020
    Second and third tranche announcement worth Rs 4.6 lakh crore

    Second tranche announcement was worth Rs 3.1 lakh crore and the third tranche was worth Rs 1.5 lakh crore.

    12:29 (IST)17 May 2020
    Computation of Rs 20 lakh crore

    Stimulus from earlier measures before the PM’s address - total Rs 1.93 lakh crore, including Rs 1.7 lakh crore under PM Garib Kalyan Yojana

    12:28 (IST)17 May 2020
    Break up of Rs 20 lakh crore economic package

    Government gives break up of Rs 20 lakh crore package, which was awaited. 

    12:25 (IST)17 May 2020
    Four sector-specific tasks for states to borrow more

    Four sector-specific tasks will be related to One Nation One Ration card,  Ease of Doing Business, Power reforms, and  Urban Local Bodies to build new opportunities.

    12:22 (IST)17 May 2020
    Govt will lend states for sector specific tasks

    Part of the borrowing will be linked to specific reforms. From 3-3.5 per cent, it will be unconditional. The other 1 per cent increase will be released in four tranches to take specified steps in four sectors. Last 0.5% will be given if at least three of these three aims are fulfilled.  

    12:16 (IST)17 May 2020
    Govt increases borrowing limit for states

    FM Sitharaman has announced to increase the borrowing limit of states from 3% of SGDP to 5% of SGDP. This will allow states to borrow an additional amount of Rs 4.28 lakh crore as extra resources.

    12:14 (IST)17 May 2020
    RBI increases WMA limits for states

    RBI has increased Ways and Means Advances by 60%, also states can remain in continuous overdraft position for 21 days, instead of 14 days

    12:11 (IST)17 May 2020
    Govt to notify strategic sectors for private sector participation

    In the notified strategic sectors, only up to four PSUs will be present - not more than 4 PSUs in those notified sector. If there are more PSUs in any sector, they will be merged together, or they will be brought in such a way that there are only four or lesser.

    12:09 (IST)17 May 2020
    Centre extends further support to states

    The central government extends more support to the state governments. Revenue deficit grants to the states of Rs 12390 crore given to states despite financial crisis - FM Sitharaman

    12:06 (IST)17 May 2020
    Private players to participate in more areas now

    Govt will notify strategic sectors where at least one PSE will be present while private players will also be allowed to participate. 

    12:05 (IST)17 May 2020
    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 EGMs. 7 compoundable offences altogether dropped, and 5 to be dealt with under the alternative framework.

    12:04 (IST)17 May 2020
    Ease of Doing Business for Corporates

    Listing of non-convertible debentures on stock exchanges will not be regarded as those companies as listed companies - so if companies were to list their NCDs on stock exchanges, it doesn’t mean that they would become listed companies.

    12:01 (IST)17 May 2020
    Private sectors can participate in all sectors

    All sectors will be open to private sectors as we need coherent policies for Atma Nirbhara Bharat even as PSUs will play an important role - FM Sitharaman

    11:59 (IST)17 May 2020
    Companies can now directly list securities in foreign jurisdictions

    Government allows companies to directly list their securities in foreign jurisdictions. Listing on non-convertible debentures will mean that the company is listed - FM Sitharaman

    11:57 (IST)17 May 2020
    Govt decriminalises offences under Companies Act

    The government has decriminalised most of the offences under the Companies Act. Also, for compoundable offences, internal adjudicating mechanism route will be set up to reduce burden on criminal courts and NCLT.  

    11:54 (IST)17 May 2020
    Govt brings relief for MSMEs

    Special insolvency resolution framework for MSMEs under section 240A of the Code to be notified soon. No fresh insolvency proceedings will be initiated for one year, depending on the pandemic situation.

    11:53 (IST)17 May 2020
    Deaths related to Covid-19 will not be included in category of default

    Deaths related to Covid-19 will not be included in the category of Insolvency and Bankruptcy Code. No fresh insolvency proceedings for the next one year. Minimum threshold for MSMEs to go under IBC code increased to Rs 1 crore - FM Sitharaman 

    11:49 (IST)17 May 2020
    'One Nation One Digital Education' & 'One Class One Channel' programmes will be launched

    PM e-vidya programme, for multi-mode access to digital/online education to be launched immediately

    • E-content for visually and hearing impaired children
    • exclusive use of radio, community radio and podcasts
    • DIKSHA for school education in states/UTs; e-content and QR coded energized text books for all grades
    11:48 (IST)17 May 2020
    Govt announces innovative steps for education

    Government will launch PM e-Vidya programme and DIKSHA for digital education and one earmarked TV channel per class will also be a part of this. Radio community and podcast also be included. 

    11:43 (IST)17 May 2020
    Govt increases expenditure on health sector

    Public expenditure on heath sector has been increased. All districts will have infectious diseases blocks and public health labs will be set up at block levels. 

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