Fifth tranche of economic package covers MNREGA, Health and more.

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Fifth tranche of economic package covers MNREGA, Health and more.


Finance Minister Nirmala Sitharaman, on May 17, 2020 announced the 5th and concluding tranche of the economic package. In order to make India “Atma Nirbhar”, the last tranche of the economic package emphasizes on land, labour, liquidity and laws. The focus is on 7 things including, Health and Education related sector, Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), businesses and COVID-19, ease of doing business, decriminalization of Companies Act, Public Sector Enterprises- related points and State Governments and related resources.

The 1st tranche was announced on May 13, 2020 following the 2nd, 3rd and 4th tranche on May 14, 15 and 16. All the 5 tranches sums up the detailed guidelines and strategy of allocation of total fund as announced earlier by Prime Minister Narendra Modi. This pool of the Rs 20 lakh crore package, that amounts to 10 percent of our GDP aims to help Nation survive the economic crisis that has arisen due to cross country lockdowns laid to curtail spread of COVID-19.


Let’s have a look at the 7 points as aired on May 17, 2020:

Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA):

The government has planned to increase the budgeted estimate by Rs 40,000 crore. Previously, the budgeted estimate for the same was Rs 61,000 crore. This increase is estimated to generate 300 crore additional labour days of work. Also, this will aid in provision of work for the returning migrants.


Health and Education Sector:

Since public expenditure on health will increase, Government has planned to ramp up investments in building health and wellness centers both in rural and urban regions. Further, every district will have special blocks in hospitals for treatment of infectious diseases.

The Finance minister announced about the technology driven education via “Diksha”. The government is soon planning to launch PM e-VIDYA programme. This programme will provide digital and online access to education. Also, there will be one earmarked channel on television catering to students of class 1 to 12. Adding further, the substantial use of community radio and podcasts will be made. Special online content will be made available for visually and hearing impaired students.

Further, top 100 universities have been granted authorization to start online courses by May 30. Apart from this, an initiative under the name “Manodarpan” will be launched soon. This programme will help in extending socio-psychological support to students and families regarding mental and emotional well-being.


Insolvency and Bankruptcy Code (IBC):

Under this, the debts related to corona cirus pandemic will be excluded from defaults under IBC. No new proceeding for insolvency to be carried out for the next one year. Special provisions will be notified under section 240-A of IBC for MSMEs. In order to insulate MSMEs, the minimum threshold limit to initiate proceedings of insolvency has been raised to Rs 1 crore from previous limit of Rs 1 lakh.


Companies Act:

Announcement as to decriminalize the companies Act was made in order to reduce the burden of criminal courts and the National Company Law Tribunal (NCLT).


Ease of Doing Business:

Public companies can go for direct listing of securities in permitted foreign jurisdictions. Private companies will be considered as unlisted even if they have debentures in the stock exchanges.


Public sector enterprise policy:

Under this policy, the government thinks that it is high time that India sees private sector participation in all the sectors while public sector still plays important role. Therefore, the government has planned to broadly categorize sectors into strategic and others. In strategic sector there will be minimum one to four public sector enterprises in order to safe guard public interest and others will be privatized or merged Whereas in other sectors, public sector enterprise will be privatized. List of the same will soon be notified.


State Governments:

The Central Government is facing steep fall in revenues in the same manner State Governments are also facing huge revenue losses. Around Rs 46,038 crore was delegated as tax revenue from the Centre to State Governments. Adding to this, nearly Rs 12,000 crore was also distributed on timely basis. In spite the borrowing limits of states raised, states have only borrowed 14 percent of the authorized limit, 86 percent still remains unused as of date. Government has now raised the borrowing limit of Gross State Domestic Product (GSDP) from 3 percent to 5 percent. This will result in availability of additional borrowing amount of Rs 4.28 lakh crore for the states.



Market update 18th May 2020. SENSEX crashes 1,069 points on a volatile day.

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