FINAL & FIFTH ROUND – NOW THIS IS A UNION BUDGET!

Today was the fifth consecutive day of hearing the FM and Anurag Thakur talk and announce measures; all good measures but there is nothing for the short term. And it makes one wonder why was the need to wait for a Covid like crisis to announce all that which the FM did over five days – they all could have come in much earlier.

Thus after five detailed and micro focused “stimulus” everyone is left wondering – its all over? But nothing really for the poorest to get over the current crisis. At such times, putting money directly into the hands of the people suffering is the only solution. Rs.500 was credited into the Jan Dhan account of women – how much would that have helped the households? Free ration – we have been seeing images of how people have been standing in long queues, in the scorching heat to get that ration.

The fact that there are hundreds of migrants continuing to walk home and many unfortunately getting killed somehow shows that there is a complete mismatch between what people want and what the Govt is the right thing to do. So, at the end of this huge supposed Rs.20 lakh crore stimulus, everyone is a bit confused – if we look at these five days as a Union Budget and not a stimulus, then we might get the right perspective.

Now lets turn to today’s announcements which covered seven facets – MGNREGA, healthcare and education, business during Covid, decriminalisation of Companies Act, Ease of doing business, PSUs related policies and lastly, State government and their resources.

The measures announced for PSUs and struggling companies were indeed path breaking but wondered why be concerned about the ranking in the Ease of Doing Business in these times. These are all fantastic measures but unfortunately, these will have an impact only once the crisis settles.

We were happy that there was some mention on health care, now that we all can see that it a huge black hole. The FM at least made a mention that India will get ready for future health emergencies by ramping up health infrastructure, ensuring all districts will have infectious diseases block and setting up public health labs in all districts at the block level.

On education, it was all about digitization. The FM announced one nation one digital facility under DIKSHA for school education. This will give online content and also QR-coded textbooks. There will be one earmarked TV channel per class from first to 12^th standard. The FM also said that the top 100 universities can automatically start online courses from 30^th May.

The most important – the FM also gave the whole math of how the Rs.20 lakh crore stimulus adds up with all these five packages.

Measures for companies in crisis:

• All debts leading to default coming from Covid crisis to be excluded from IBC – starting date of “crisis” to be notified
• No new insolvency case to be initiated for up to a year
• Special insolvency framework to be notified for MSMEs - Ordinance to be issued for amending IBC, Parliament will ratify the changes later
• Major jump in minimum threshold for insolvency from Rs.1 lakh to Rs.1 crore

Measures for decriminalization under Companies Act:

• Violations of Companies Act involving minor technical and procedural defaults to be decriminalized – like shortcoming in CSR reporting, inadequacies in board report, filing defaults, delay in holding AGM.
• 7 compoundable offences altogether dropped
• 5 to be dealt with under alternative framework

Ease of Doing Business:

• To help companies to directly list their securities in foreign jurisdiction
• Private companies which list non-convertible debentures on stock exchange not to be regarded as listed companies

Public Sector Enterprise policy:

• All sectors will be opened to private companies
• PSUs will play an important role in defined areas – these strategic sectors will be notified
• In such notified sectors too private sector will be allowed
• To bring down wasteful administration costs, a number of enterprises in strategic sectors will only be one to four, others will be privatised, merger of brought under holding companies.

State resources and expenses:

• To increase borrowing limit of states from 3% to 5% for FY21 – to give states an extra Rs 4.28 lakh crore.
• Of this, 3 to 3.35% will be unconditional increase – balance linked to four reforms like One Nation One Ration Card, Ease of Doing Business, Power distribution and Urban local body revenues.