The Centre on Sunday announced plans to privatise public sector undertakings (PSUs) in non-strategic sectors and suspend loan default-triggered bankruptcy filings for one year in the fifth and final tranche of its economic stimulus package that together with Reserve Bank of India’s liquidity measures totalled to about Rs 21 lakh crore but entailed less than 10 per cent cash outgo from government coffers.
Finance Minister Nirmala Sitharaman, whose previous four parts of the stimulus package involved credit line to small businesses and new fund creations to be shouldered by banks and financial institutions with very little extra budget spending, announced a Rs 40,000 crore hike in allocation for the rural employment guarantee scheme to provide jobs to migrant workers. She also raised the threshold of insolvency proceedings to help the industry deal with COVID-19 pains.
The government also announced a new policy for companies under state control, saying PSUs in non-strategic sectors will be privatised while those in the identified strategic sector would be capped at four, with the rest to be merged or sold.
Sitharaman said the five-part stimulus together with the March 26 announcement of free foodgrains and cooking gas to poor and some cash to vulnerable sections for three months and RBI’s Rs 8.01 lakh crore worth of liquidity measures swell the size of the COVID-19 economic package to Rs 20.97 lakh crore.
While she refused to say what would be the extra spending by the government, analysts pegged it at no more than Rs 2.10 lakh crore after considering the March 26 announcement, free foodgrains to migrant workers, increased allocation for MGNREGS, tax relief to certain sections and Rs 15,000 crore allocated to the healthcare sector to deal with the pandemic.
Prime Minister Narendra Modi’s pledge of total spending of Rs 20 lakh crore ($265 billion) to weather the fallout of the coronavirus pandemic under ‘Atma-nirbhar Bharat Abhiyan’ is about 10 per cent of India’s GDP in 2019-20 and ranks behind stimulus provided by Japan, the US, Sweden, Australia and Germany.