NEW DELHI: The Narendra Modi government seems to have decided that unleashing a wave of economic reforms would be the best way forward to catalyse Indian industry. The reforms push comes on top of the Rs 21 lakh crore stimulus and liquidity measures announced by the Centre over the past few days.
After allowing foreign investment in defence industries up to a majority 74% and unveiling a spate of mining and power sector reforms, the Centre on Sunday set the ground for mergers of PSUs in strategic areas and privatisation of PSUs in all other areas, announcing that not more than four PSUs would be allowed in strategic areas.
It also eased the rules of business for corporates saying no insolvencies will kick in for one year for businesses due to loan defaults in view of the pandemic.
The government wants to increase competitiveness of domestic firms and attract global industry seeking newer locations, said Prof Biswajit Dhar of the Jawaharlal Nehru University, an expert on foreign trade and investment.
However, offficials said the wave of privatisation, which would follow, may not happen before the next financial year as market conditions are not conducive now for large sales of enterprises.
The government on Sunday also said it would spend `40,000 crore more on the National Rural Employment Guarantee programme to give jobs to migrant workers who have fled cities for their villages amid the lockdown.
“Since many have gone back to their villages”, they might face job loss and so, “if they enroll, they can get jobs” under the scheme, said Finance Minister Nirmala Sitharaman in her fifth and last tranche of measures to counteract the pandemic. “This will help generate 300 more person days,” added Anurag Thakur, MoS Finance and Corporate Affairs.
Considering the revenue fall of States, the finance minister, in consultation with the Reserve Bank of India, increased advance limits for states by 60% and hiked the borrowing limits from 3% to 5%, with a rider that these hikes will be linked with specific reforms such as increasing job creation through investment and promoting urban development, health and sanitation.
The guidelines also specified the restrictions that have not been lifted such as night curfew, which will continue to remain in force on the movement of individuals, for all non-essential activities, between 7 pm and 7 am. And the limitation on number of people attending funerals and weddings, which still remains the same as 20 and 50 respectively.
The Centre said that vulnerable i.e., persons above 65 years of age, with co-morbidities, pregnant women, and children below the age of 10 years, shall continue to stay at home, except for meeting essential requirements and for health purposes. The ministry encouraged use of Aarogya Setu app.