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Centre throws open all sectors to private players

MGNREGA gets Rs. 40,000 crore in FM’s fifth tranche

The Centre has agreed to demands from States to hike their borrowing limits from 3% to 5% of their GDP in light of the COVID-19 crisis, but on the condition that they implement specific reforms.

The fifth and final tranche of the Atmanirbhar Bharat Abhiyan stimulus package, announced by Finance Minister Nirmala Sitharaman on Sunday, also included an additional Rs. 40,000 crore allocation for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), and a new policy welcoming private companies into every sector of industry, while limiting public sector enterprises to strategic sectors only. Corporate enterprises were also offered some relief via changes to the Insolvency and Bankruptcy Code (IBC) and the Companies Act.

The total package amounts to almost Rs. 21 lakh crore by the Centre’s accounting, but is heavy on credit-related measures, including Rs. 8 lakh crore worth of liquidity enhancing measures by the RBI. Some analysts felt that this amounted to double counting as the credit guarantee schemes to support small companies and non-banking finance companies would also tap into the RBI’s measures.

“The final picture shows that of the Rs. 20.97 lakh crore stimulus package — which amounts to 9.8% of GDP — only Rs. 2.2 lakh crore can be traced as direct additional budgetary cost to the Central exchequer, while another Rs. 1.55 lakh crore relates to already budgeted expenditures,” said Ernst and Young chief policy adviser D.K. Srivastava, who is also on the Advisory Council for the 15th Finance Commission.

“The remaining 85% comes from the RBI’s liquidity announcements, credit guarantee schemes and insurance schemes, apart from the structural reforms which are not really stimulus or relief measures.”

The decision to allocate Rs. 40,000 crore to the MGNREGA scheme in addition to the Rs. 61,000 crore allocated in the Budget was widely welcomed, as a measure that will support rural livelihoods at a time when returning migrants swell unemployment in the villages.

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