The Rs 40,000-crore hike in allocation for the rural employment guarantee scheme this fiscal, taking the total allocation to over Rs 1.01 lakh crore, was the need of the hour, promising relief to migrants returning home in their thousands. Excluding the pending dues, spending on the scheme is estimated to be Rs 90,000 crore. The Finance Minister, in the significant final tranche of the stimulus package, also announced that MGNREGS works would continue during the monsoon months as well to address the needs of the returning migrants. April and May have seen a 40-50 per cent drop in work enrolment under the scheme, partially due to the lockdown and lack of job opportunities. The government’s targeted push is bound to provide succour.
In another major reform, a new public sector enterprise policy envisages at least one state-run company in strategic sectors, and eventual privatisation of state-owned firms in other segments. The disinvestment programme would get a boost, but what will and won’t be strategic is a key decision. Further consolidation and mergers in the banking sector also seem to be on the cards. The suspension of new bankruptcy filings on loan defaults for a year and raising the threshold for insolvency under the Insolvency and Bankruptcy Code (IBC) to Rs 1 crore is likely to insulate MSMEs from IBC proceedings.
Across five tranches, Nirmala Sitharaman has presented 54 measures in total, of which 30 are policy reforms. The infusion of less-than-expected liquidity, which is seen as crucial to the revival of the economy, remains a concern. ‘Jitna bhi karo kum hai,’ she replied to a question on whether the Centre could have done more. The focus, she stressed, should be on where the money is going, how it is used to prevent an MSME from closing shop, and how it is going to help workers to get wages. No argument on that. To what extent and how soon the measures bring about a quantifiable change on the ground would be the real test.
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