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Key takeaways from the Economic Package announced by Union FM May, 2020

Prime Minister Shri Narendra Modi announced Rs 20 lakh crore fiscal stimulus equivalent to 10 per cent of India’s GDP to deal with COVID-19 situation in the country, the Union Finance Minister Nirmala Sitharaman announced the following changes in the various other sectors to promote the motto of Self Reliant India and boost the economic status of the Country.

Other Reforms in MSME Sector

  • Rs 3 lakh crores Collateral free Automatic Loans for Business, including MSME
  • Rs 20,000 crore Subordinate Debt for MSMEs
  • Rs 50,000 crore equity infusion through MSME Fund of Funds
  • E-market linkage for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions.
  • MSME receivables from Gov and CPSEs to be released in 45 days

Reforms in Labour Sector (Benefit for Workers)

  • Universalization of right of minimum wages and timely payment of wages to all workers including unorganized workers – presently minimum wages applicable to only 30% of workers.
  • Statutory concept of National Floor Wage introduced: will reduce regional disparity in minimum wages.
  • Appointment letter for all workers- this will promote formalization.
  • Occupational Safety & Health (OSH) Code also applicable to establishments engaged in work of hazardous nature even with a threshold of less than 10 workers.
  • Extension of ESIC coverage pan-India to all districts and all establishments employing 10 or more employees as against those in notified districts/areas only.
  • Gratuity for Fixed Tem Employment – Provision of gratuity on completion of one year service as against 5 years.

Measures for Real Estate Projects

Invocation of Force Majeure clauses with Real Estate Regulatory Authority (RERA) – The government of India has advised the State Governments to invoke the ‘Force Majeure’ clause in RERA registered projects on the grounds of the pandemic COVID-19. Timelines for registration and completion date is extended by 6 (six) months for all registered projects expiring on or after 25th March 2020, with a further extension of 3 months as per the situation of the relevant State. Other statutory compliances with RERA shall also be extended.

Civil Aviation Reforms

  • Easing up of restrictions on utilization of Indian airspace in order to ensure optimal utilisation of airspace, positive environmental impact and substantial cost reductions by a reduction in fuel use and time for civil aviation. Currently, only 60% of Indian airspace is freely available. The move will benefit the sector to the tune Rs. 1,000 crores per year.
  • The tax regime for aircraft Maintenance, Repair and Overhaul (MRO) has been rationalized. Value of component repairs and airframe maintenance to increase from Rs 800 crores to Rs 2,000 crores over the next three years.
  • In addition to six other airports being listed for the third round of auctions, six new airports will be offered for auction by the Airports Authority of India (AAI) under PPP (private-public partnership). Additional investment by private players in 12 airports is expected to be around Rs 13,000 crores, the government said.

Agricultural Reforms

  • A new central law will be brought in to provide adequate choices to farmers to sell their produce at an attractive price, barrier-free interstate trade as well as a framework for e-trading of agricultural produce.
  • The government will also amend the Essential Commodities Act, 1955, to deregulate cereals, edible oils, oilseeds, pulses, onions and potatoes in a bid to enable better price realisation for farmers.
  • Stock limit to be imposed under exceptional circumstances like natural calamities.

Atomic Energy-related Reforms

  • Establish a research reactor in PPP mode for the production of medical isotopes promote the welfare of humanity through affordable treatment for cancer and other diseases.
  • Establish facilities in PPP mode to use irradiation technology for food preservation to compliment agricultural reforms and assist farmers.
  • Link India’s robust startup ecosystem to nuclear sector Technology Development cum Incubation Centres will be set up for fostering synergy between research facilities and tech entrepreneurs.

Other Reforms

  • Private sector participation will be allowed in space exploration and related activities and can use ISRO (Indian Space Research Organisation) facilities to improve their capacities.
  • Private sector investments in social-infrastructure projects will be boosted via Rs. 8100 crore Viability Gap Funding Scheme.
  • Power distribution companies in Union Territories will be privatized in line with tariff policy reforms.
  • Rs 10,000 crores scheme for Formalisation of Micro Food Enterprises (MFE)
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