Privatizing non-strategic PSUs
19/05/2020
In a welcome decision, the Centre has announced plans to privatise 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 RBI’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. 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. The five-part stimulus together with the March 26 announcement of free foodgrain 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.
Prime Minister Narendra Modi’s pledge of total spending of Rs 20 lakh crore (USD 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. With global lockdowns imposed to check the spread of COVID-19 causing economic turmoil that is touted to be worst since the 1930s, nations have announced what came to be known as ‘coronavirus stimulus packages’. The US has committed to the largest rescue package by any country in pure dollar terms at USD 2.7 trillion.
In the fifth and final tranche of the economic stimulus package announced yesterday raised the allocation for the employment guarantee scheme by Rs 40,000 crore over and above the Rs 61,000 crore budgeted for MGNREGS to provide jobs to migrant workers moving back to their States. A special insolvency resolution framework for MSMEs under Section 240A of the Insolvency and Bankruptcy Code (IBC) will be notified soon, she said, adding fresh initiation of insolvency proceedings will be suspended for up to one year depending upon the pandemic situation.
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