New government policy for public sector: Union Finance Minister Sitharaman

New Delhi: Union Finance Minister Sitharaman announced that the government is forming a new policy for the Public Sector Enterprises (PSE). The Finance Minister was announcing the fifth and final phase of the economic package announced by Prime Minister Narendra Modi. Sitharaman made a huge announcement of privatisation of all PSEs except the strategic sector. The government also has brought relief to the industry sector by amending the criteria for declaring bankruptcy, in the MSME sector. Revising the borrowing limits of the states upwards, the union government has ensured liquidity in the hands of the state governments, during this time of crisis.

Finance Minister Sitharaman announced that all PSEs, other than the ones connected with the strategic sector will be privatised. The Union Finance Minister also said that as a policy, there will not be anything more than 1 to 4 PSEs even in the strategically important sectors and all the sectors are being opened up for the private sector. She added further that private companies will be allowed entry even in the strategic sectors.

As per the scheme, some sectors will be categorised as strategic sectors. It will be decided in due course of time, as to which companies will be privatised and which companies will continue to work as PSEs in the strategic sector. Sitharaman clarified that as part of this policy, some of the PSEs will be merged to reduce the number of companies in the public sector.

During this period of Coronavirus crisis, the states also have suffered loss of revenues and therefore limits for borrowing from the centre, by the states, have been set proportionate to the GDP of that state. While informing that the Union government has passed on ₹ 460 billion as a share of taxes, to the states. Furthermore, Sitharaman said that the borrowing limits for the states have been set at 5%. Before this, the states could borrow up to 3% of the GDP. All the states put together have borrowed only 14% of the available limits. Still, 86% of the limits are available. Sitharaman said that with this increase in the borrowing limits, an additional resource of ₹4.28 trillion will be available to the states.

Sitharaman also made announcements comforting the Micro, Small, Medium Sector (MSME) companies. The Company law is being amended and small technical deficiencies, will not be treated as criminal acts. The companies have been provided relief even under the ‘Insolvency and Bankruptcy Act’. As per this, businesses of the companies have been affected by the Coronavirus pandemic and these companies will not be considered as defaulters on failure in repayments or not making timely payments of loan instalments. At the same time, the insolvency procedure will not be started for, at least one year. A special insolvency procedure is being drafted for the MSME Sector. Sitharaman informed that the limit for initiating the insolvency process has been raised from ₹100 thousand to ₹10 million.

Technology support will be taken for Education. Under the PM E-Vidya program, digital platforms will be made available for school education. 12 educational channels will be started, one for each standard. Special programs will be broadcasted for differently-abled students. Sitharaman said that 100 universities in the country, have been instructed to start online courses from 31st of May. A program under the name ‘Manodarpan’ will be started for making psychological advice available to students, parents and teachers.

A major decision in the health sector was also announced. The number of wellness centres will be increased in rural as well as urban areas. Every district will henceforth have an Infectious disease Hospital Block. Public Health Lab and hospitals will be built under the scheme. Sitharaman announced an additional provision of ₹ 400 billion for the providing employment guarantee to more people under MNREGA.