Economic Package 5th Tranche Benefits Small Developers

Finance Minister Nirmala Sitharaman announced today that any debt incurred during the Covid-19 crisis for a company will be excluded from the default category under IBC. Additionally, she announced that no fresh insolvency will be initiated for one year, so impacted businesses can focus on survival and recovery for this period. This measure, along with the previously-announced sops such as extension of loan moratoriums and extension of RERA deadlines, can come to the rescue of smaller local developers who are particularly impacted by the funding crunch and low sales. Apart from this, decriminalization of Companies Act involving minor technical and procedural defaults will also benefit the corporates at large. These reforms will not only give confidence to the existing corporates but will also ensure the ease of doing business in the country and, therefore, make India ‘Self Reliant’ in the long term. Shishir Baijal, Chairman & Managing Director, Knight Frank India expressed, “Whilst we understand the constraints of the government, from the real estate sector point of view, the announcements were inadequate in addressing the issues faced by the sector. Overall, we feel disappointed that no direct demand stimulus was announced that could have benefited the beleaguered sector.” Dr D K Aggarwal, President, PHDCCI stated, “Opening up of all sectors to private sector is a major breakthrough which will significantly push industrial and socio-economic development in the country. The decision to allocate an additional Rs 40,000 crore under MGNREGS will help in generating employment opportunities and boost rural economy. The focus of the Government in increasing public expenditure on health and investment in grass root health institutions will ramp up health infrastructure. Announcement on IBC reforms will lead to enhancement of ease of doing business in the coming times and reform of decriminalisation of Companies Act will de-clog the criminal courts and NCLT and provide much needed relief to the industry stakeholders. The significant reform of introducing new Public Sector Enterprise Policy will provide an excellent platform for private sector to leverage the opportunities in all sectors of economy while, reforms announced for supporting State Governments including borrowing limits of States being raised from 3% to 5% for 2020-21 will help increasing job creation through investment.”