Our Finance Minister, Mrs Nirmala Sitharaman on 23 August 2019, announced measures to boost the economy. Amongst the measures to increase consumer demand and infuse liquidity in the economy, the FM also paved the way for infrastructure investments. The FM also made announcements towards simplification of labour laws.
1. Infrastructure sector:
In the Union Budget 2019, the government announced to invest Rs 100 lakh crore in infrastructure over the next five years. It was also proposed to set up an expert committee to study the long-term financial requirements of the infrastructure sector.
Based on the study and experience on credit availability, it was proposed to recommend a structure for financing the infrastructure sector. The FM has now set up an inter-ministerial task force to finalise the infrastructure projects under the investment plan.
Various infrastructure project developers had been facing delay in payments from central public sector enterprises (CPSEs). The FM has announced that the Department of Expenditure would review the delayed payments. Further, the project performance supervised by the Cabinet Secretariat.
The Cabinet Secretariat will supervise any contractual disputes arising between developers and the government or CPSEs. Further, for cases under contractual disputes, a decision is taken to pay 75% of the arbitration awards to contractors.
The infrastructure sector is one of the key drivers for the economy. It is presently reeling under a credit crunch. The measures mentioned above would ensure the acceleration of payments in the infrastructure sector and improving liquidity.
Similarly, the FM has also announced the establishment of an organisation to provide credit enhancement for infrastructure and housing projects. The move aims to augment the flow of funds for the infrastructure sector.
The infrastructure sector is one of the largest creators of employment. The above measures would also create employment opportunities in the overall economy.
2. Labour laws
The FM has reiterated the policy of allowing fixed-term employment for all. Earlier, vide Notification No. G.S.R. 235(E) issued on 16 March 2018, the Ministry of Labour and Employment had extended facility of employing workers for fixed-term employment to all sectors. The measure sought to ease doing business and facilitating completion of ongoing projects in various industries.
In line with the policy of ease of doing business, the FM has also reduced the contribution under ESIC (Employees’ State Insurance Act). The overall contribution to ESIC made by an establishment will reduce from 6.5% to 4%. Similarly, startups can register themselves through self-certification under six labour laws.
To further simplify the labour laws, the FM has announced web-based and jurisdiction free inspections and compounding of offences. The announcements are in line with the labour reforms undertaken by the government. The government had recently notified the Code on Wages, 2019 subsuming Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act and Equal Remuneration Act.
I am a Chartered Accountant by profession. I specialise in personal taxes and corporate income tax matters. I am an avid reader and track developments in financial markets, economy and other market developments.