As Narendra Modi braces for a second term, his government will likely consider a clutch of proposals over the next 100 days to complete unfinished goals of fine-tuning reforms like the IBC, spurring private investments, reversing a slowdown in consumption, creating jobs and fixing farm policies.
Sources told FE that immediately after assuming office, the new Modi-led Cabinet will weigh a proposal to amend the Insolvency and Bankruptcy Code (IBC) to bring in a cross-border insolvency framework and enable lenders to access foreign assets of a stressed firm. The insolvency regulator will also come up with individual insolvency regulations to facilitate a debt relief up to `35,000 to the poorest of the poor.
The government could also use its clout to impress on adjudicating or appellate authorities to speed up the disposal of insolvency cases and spare the lenders of the cost of delays, said one of the sources. The Essar Steel case, for instance, has been dragging on for more than two years now, even though the IBC stipulates resolution within a maximum of nine months.
The Centre will also step up talks with the Reserve Bank of India to ensure that its revised circular for stressed asset resolution addresses concerns of various stakeholders. Also, amid fears of a worsening solvency crisis in the NBFC space, the government wants to ensure there is no liquidity crunch.
More stakeholder discussions will soon take place on the draft e-commerce policy, especially on its controversial provision to curb cross-border data flow, according to another source. The draft policy says sharing of such data with third party entities, even with customer consent, is barred under the policy . In the absence of a clear-cut definition of the third party, this will mean an Amazon India won t be able to share data with Amazon Inc for business development or better customer satisfaction.
A proposal to usher in the next round of consolidation in the public-sector banking space, which was put off due to general election, is back for evaluation.
The government has been weighing the possibility of amalgamating Punjab National Bank (PNB) with Oriental Bank of Commerce (OBC) and some other small lenders.
Proposals to help boost the flow of funds into the start-up space and also set up a fund for start-ups, with an initial corpus of `1,000 crore, will be considered.
The agriculture export policy will be further fine-tuned to address farm distress by raising incentives for exports. Even the export regime for some of the key commodities (ranging from grains to cotton) that still face risks of curbs will be re-evaluated. Also, the procurement policies for various crops, including PM-Aasha, will be reviewed, as the government intends to walk the talk on ensuring farmers a 50% profit over their costs. Even the crop insurance scheme could be appropriately tweaked to address farmers’ concern better, although it’s not an immediately priority. “The idea is to boost farm income and help the unorganised component of the economy create jobs,” said a senior government official.
The new industrial policy that aims to create jobs, attract $100 billion FDI annually (against a record $60 billion in FY18) is ready to be launched soon after the government’s approval. It seeks to offer a slew of incentives to boost manufacturing and promote the use artificial intelligence.
A comprehensive strategy is being firmed up to counter the impact of the Trump-led trade war while ensuring that the strategic partnership with the US doen’t falter. The government will also take a call on slapping the proposed retaliatory tariff worth $235 million on 29 American goods in response to the extra US duty on its steel and aluminium (The fresh deadline for the tit-for-tat action is June 16). It could also make final offers to the US on the latter’s demand to cut or scrap tariff on seven ICT products, including high-end cell phones and smart watches.