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Finance Ministry amends rules to disallow global firms from govt contracts up to Rs 200 cr



The Finance Ministry has amended rules for all government procurement disallowing global firms from participating in tenders up to Rs 200 crore, a move that is in line with the ‘Atamnirbhar Bharat Abhiyan’ (self-reliant India) economic stimulus package announced in mid-May.

“Now, no Global Tender Enquiry (GTE) shall be invited for tenders up to Rs 200 crore, unless prior approval is obtained from Cabinet Secretariat,” the ministry said in a statement on Sunday. The move aims to benefit domestic micro, small and medium enterprises (MSMEs), it added.

The statement was issued after finance minister Nirmala Sitharaman reviewed implementation of various announcements of the Rs 20 lakh crore package that related to ministries of finance and corporate affairs. Sitharaman is also minister for corporate affairs.

Prime Minister Narendra Modi in an address to the nation on May 12, had announced about the financial package to stimulate Covid-19 pandemic-hit economy following which the finance minister unveiled details of the package in five-tranches from May 13 to May 17, 2020.

While announcing the last tranche of the package on May 17, Sitharaman had said the Centre had also accepted the demand of states to raise their borrowing limit from 3% of their respective GSDP to 5% that would give them additional resources of Rs 4.28 lakh crore at this time of Covid-19 crisis. The increased limit was, however, conditional and depended on implementation of reforms by them in four areas — one-nation-one-ration-card, ease of doing business, power distribution and urban local body revenues, she had said.

Sunday’s statement by the finance ministry also issued a formal communication to state governments raising their borrowing limits by 2% of their projected gross state domestic product (GSDP) in 2020-21 subject to implementation of specific state-level reforms, the statement said.

In order to give relief to contractors, the department of expenditure (DoE), an arm of the finance ministry, has issued instructions to central agencies such as railways, ministry of road transport and highways and Central Public Works Department (CPWD) to give them additional time up to six months for completion of contractual obligations, it said.

Giving details of the Rs 3 lakh crore collateral-free automatic loans for businesses, including MSMEs, it said loans worth Rs 1.20 lakh crore have been sanctioned under the Emergency Credit Line Guarantee Scheme (ECLGS) and moans worth Rs 61,987 crore have been disbursed. “Fund was registered on 26.05.2020. In a short period of about one and half months noticeable progress has been achieved in identifying units, sanctioning as well as disbursing of loans to MSMEs,” it said.

The package also announced a Rs 45,000 crore Partial Credit Guarantee Scheme to strengthen non-banking finance companies (NBFCs) and micro finance institutions (MFIs), where the Union government would provide 20% first loss sovereign guarantee to public sector banks. “Banks have approved purchase of a portfolio of Rs 14,000 crore and are currently in process of approval/negotiations for Rs 6,000 crore as on July 3, 2020,” the statement said.

It said that Rs 24,876.87 crore has been disbursed to small and marginal farmers as on July 6, as a special facility for kharif sowing. The scheme envisages Rs 30,000 crore additional emergency working capital funding to farmers through the National Bank for Agriculture and Rural Development (NABARD).

The statement said the Central Board of Direct taxes (CBDT) had already issued refunds in over 20.44 lakh cases amounting to more than Rs. 62,361 crore between April 8 and June 30. “Remaining refunds are under process,” it added.

It said the ministry of corporate affairs is finalising a special insolvency resolution to provide relief to the MSMEs and the same would be notified soon.

Reacting to the finance ministry’s Sunday notification, Ranen Banerjee, leader – Economic Advisory Services at consultancy firm PwC India, said that there is a need to speed up the disbursements under the guaranteed collateral free loans as it is still under 25% of the allocated Rs 3 lakh crore.

“The additional borrowing limit to the states is conditional. It will have to be seen how many states are able to move quickly to be able to meet the conditions. Some states may not need the additional limits as they have been constrained in their ability to spend,” he said.

The government has moved fast in putting the necessary notifications and guidelines in place, he said. “It will now be for the implementing agencies to demonstrate the urgency. The actions clearly work in progress and we need to move fast with the approvals and disbursements under the various liquidity measures,” he said.


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