Most of the measures for eight sectors announced Saturday under the fourth tranche of Union Finance Minister Nirmala Sitharaman’s Covid economic package were either a new push to old reforms proposals or an aggregation of earlier decisions.
The latter includes: commercial coal mining; coal gasification projects; building a hub for aircraft maintenance, repair and overhaul (MRO); privatisation of airports, and optimisation of Indian airspace.
The renewed push for commercial mining is a proposal over two years old. A way to auction coal mines/blocks for sale of coal under the provisions of the Coal Mines (Special Provisions) Act, 2015, and the Mines and Minerals (Development and Regulation) Act, 1957, it was approved by the government in early 2018 and an order was issued on February 27, 2018. Subsequently, the Coal Ministry said it had identified “15 large coal blocks” for the pilot round of bidding in December that year.
The government said coal gasification and liquefaction will be incentivised through rebate in revenue share but project rollouts have already begun.
A revival of Talcher unit of Fertilizer Corporation of India Limited via a Joint Venture/ Special Purpose Vehicles of nominated PSUs for manufacturing of urea through Coal Gasification route was cleared in December last year.
Rashtriya Chemicals and Fertilizers Limited (RCF), Gas Authority of India Limited (GAIL) and Coal India Limited (CIL) entrusted PDIL to carry out a feasibility report for production of ammonia through coal gasification route.
Former finance minister P Chidambaram tweeted: "Thank you Honourable FM @nsitharaman for acknowledging that the Additional Expenditure can be met only by Additional Borrowing. Thank you for confirming what I said in my column today."
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Congress leader Anand Sharma added: The Finance Minister should answer, not question; the government has to answer on the plight of migrants forced to walk on the roads due to lack of planning. The government is misleading people of country in the name of economic package. The Prime Minister must walk the talk now. The government must apologise to the poor citizens left abandoned by it; their fundamental and legal rights have been violated."
Hours after Nirmala Sitharaman's briefing, Congress leader Anand Sharma alleged that the government's packages did not amount to Rs 20 lakh crore as promised by Prime Minister Narendra Modi. "The government's package is only worth Rs 3.22 lakh crore and is only 1.6% of GDP; it's not Rs 20 lakh crore as announced by PM Modi. I'm questioning the finance minister, disputing the PM and challenging the government to disprove me on numbers. I am ready for a debate with the finance minister in this regard," he said. "We expect seriousness and gravitas from the finance minister; what she has said against the Congress is frivolous," he added while referring to Sitharaman's remarks on Congress leader Rahul Gandhi's meeting with the migrants.
The Finance Minister also took a swipe at Congress leader Rahul Gandhi over his meeting with migrants in the national capital on Saturday. She said: "Why politicise the issue of migrants? I want to tell the opposition party that we must work all together. We are working with all states on this issue. With folded hands, I ask Sonia Gandhi ji that we must speak and deal with our migrants more responsibly."
Concluding her announcements, the Finance Minister is now responding to queries from journalists.
"Part of the borrowing (by states) will be linked to specific reforms. From 0-3%, it will be unconditional. Upto 4.5%, it will be released in four tranches. The last 0.5 will be given as soon as the milestones are reached in at least three of the conditions," Nirmala Sitharaman announced.
Sitharaman added: "While the borrowing sealing of the states were increased, they have only borrowed 14% of the limit authorised to them; 86% remain unutilised as of now. We have now allowed them to borrow up to 5% of GSDP from the earlier 3%. This means, the states can now borrow an additional amount of Rs 4.28 lakh crore."
Speaking on the support which has been extended to state governments, Nirmala Sitharaman said, "Like the Centre, the state is also witnessing a sharp drop in revenues. Over Rs 46,038 crore were devolved as tax revenue to states. Over Rs 12,000 crore were also dispensed on time. The Health Ministry has also released over Rs 14,000 crore. The RBI in a very timely step has increased ways of advancing limits for states by 60%. The number of days a state can be in an overdraft situation in a quarter have been raised."
Speaking of a public enterprise policy, she said, "All sectors will be opened to private sectors also. Public sectors will continue to play an important role in defined areas. We shall defined the areas or categories. The strategic sectors in which public private sector enterprises will be present will be notified. Not more than four enterprises will be present in each sector."
Under the Companies Act, Sitharaman said the government is trying to decriminalise most of the sections. Compoundable offences can now be tried under internal adjudicating mechanisms, she said.
On matters concerning the Insolvency and Bankruptcy Code (IBC), Sitharaman said, 'Debts related to COVID shall be excluded from default under the IBC. No fresh insolvency proceedings will be made for a year. For MSMEs, a special insolvency framework will be notified under Section 42A of IBC, the minimum threshold has increased from Rs 1 lakh to Rs 1 crore.'
The government also increased its expenditure for public healthcare. Sitharaman said: "All districts will have an infectious diseases' block. Public health labs will be set up at all block levels."
Making her first announcement for the day, Nirmala Sitharaman said, "The budget estimate for MGNREGA was Rs 61,000 crores. The government will now allocate an additional Rs 40,000 crore."
The government, Sitharaman said, has also taken a number of health-related steps to contain the spread of Covid-19 - Rs 15,000 crore announced for states, essential items, testing labs and kits along with rolling out of teleconsultation services, launch of Arogya Setu app and protection to health care workers with adequate PPEs.
On the steps taken for the education sector, the finance minister said, "The direct telecast mode use by schools will now get 12 more channels. This will also help in the rural areas. Provision has been made for live telecast of teachings. We have also tied up with private operators such as Tata Sky and DTH to air educational content."
Around 2.2 crore building and construction workers received Rs 3,950 crore from the Building and Construction Workers Cess Welfare Fund distributed by states, the Finance Minister said.
The Finance Minister will make announcements for the following sectors today: MNREGA, health (rural and urban) and education, business, de-criminalisation of Companies Act, Ease of Doing Business, Public Sector Enterprises, state govts and resources to them.
Providing more details on the government's efforts, the Finance Minister said, "At least 85% of the train travel costs were borned by the government. Food was also provided to the travellers. When it was possible to have workers to travel from camps to their hometowns, trains were allowed."
"Rs 16,394 crorehas reached 8.19 crore farmers. Twenty crore women were benefited after Rs 10,025 crore were deposited in their accounts. The building and construction workers also received their financial support due to Direct Benefit Transfer. We immediately responded to cash transfers and provided cooking gas to those in need," Sitharaman said.
Quoting Prime Minister Narendra Modi while addressing reporters today, Sitharaman said: "In order to prove the resolve of the self-reliant India, land, labour, liquidity and laws, all have been emphasised in this package." She added, "We have announced several reforms in this regard and shall continue with the same today."
Ahead of the presser, former finance minister P Chidambaram tweeted: "My one line comment on FM’s fourth tranche: No fiscal measure, ZILCH."
Following the press meet on Saturday, three defence workers’ unions – affiliated to Rashtriya Swayamsevak Sangh (RSS), Congress and the Left – came together to oppose the announcements of corporatisation of Ordnance Factory Board (OFB) and increased Foreign Direct Investment (FDI) in the Defence manufacturing. Sitharaman’s announcement for self-reliance in defence production included corporatisation of OFB for improving autonomy, accountability and efficiency in ordnance suppliers and FDI limit in defence manufacturing under automatic route to be raised from 49 per cent to 74 per cent. Mukesh Singh, general secretary of Bhartiya Mazdoor Sangh, said, "This act of the government at the time when the nation is engaged in fighting the Covid-19 pandemic, not only amounts to dishonouring the commitment, but also establishes the arrogance of the administration and a derailment of the democratic process. BPMS calls upon the government to immediately roll back its decision, failing which it will launch a nationwide agitation, which will be at the risk and cost of the government."
With an aim to reduce India’s import bill for the defence sector, the Finance Minister on Saturday said the government will bring reforms to make India more self-reliant in defence production. The main moves include corporatisation of Ordnance Factory Board (OFBs), raising FDI limits in defence manufacturing, having a time-bound procurement process, notifying a list of weapons that cannot be imported and indigenisation of spares, she said. India is among the top three importers of arms in the world. In March, MoS, Defence, Shripad Naik told Parliament that India imported defence equipment worth Rs 45,705.57 crore in 2018- 2019. The government Saturday said there will be a notified list of weapons and platforms that will be banned for imports and there will be a push towards “indigenisation of imported spares”. The list of equipment banned for imports will be prepared by the Department of Military Affairs headed by the Chief of Defence Staff. The government will, however, allow import of necessary equipment not manufactured in India.
Finance Minister Nirmala Sitharaman will announce the fifth and last tranche of the Rs 20-lakh crore Covid-19 packages part of the “Atmanirbhar Bharat Abhiyan (Self-reliant India campaign) at 11 am on Sunday. On Saturday, an official informed that the minister will hold the press meet at 11 am instead of 4 pm today. Follow our blog for all the latest updates.