THE CONTEXT: Prime Minister Narendra Modi announced an economic package totalling Rs 20 lakh crore to tide over the Covid-19 crisis under ‘Atmanirbhar Bharat Abhiyan’. The Rs 20 lakh crore package (10% of GDP) includes the government’s recent announcements on supporting key sectors and measures by Reserve Bank of India. The special economic package would focus on land, labour, liquidity and laws.
PRIME MINISTER’S VISION
- Call for आत्मनिर्भरर्ारतअनर्यािor Self-Reliant India Movement
- Five pillars of Atmanirbhar Bharat – Economy, Infrastructure,
System, Vibrant Demography and Demand - Special economic and comprehensive package of Rs 20 lakh
crores – equivalent to 10% of India’s GDP - Package to cater to various sections including cottage industry,
MSMEs, labourers, middle class, industries, among others. - Bold reforms across sectors will drive the country’s push towards self-reliance
- It is time to become vocal for our local products and make them global.
THE KEY FEATURES OF ATMNIRBHAR BHARAT ABHIYAN (ANBA)
The goal
- To become self-reliant.
Five pillars
- Economy
- Infrastructure
- Technology driven system
- Vibrant demography
- Demand
The Five phases
- Phase-I: Businesses including MSMEs
- Phase-II: Poor, including migrants and farmers
- Phase-III: Agriculture
- Phase-IV: New Horizons of Growth
- Phase-V: Government Reforms and Enablers
Explaining Self-reliance
- Self-reliance implies that product and factor markets are made flexible in order to allow the Indian economy to adapt to the problems and opportunities of an emerging post-COVID world.
All inclusive
- India’s self-reliance there is a concern for the whole world’s happiness, cooperation and peace, self-reliance, does not advocate for a self-centred system.
- Active participation in post-COVID global supply chains as well as the need to attract foreign direct investment.
Decentralised localism
- LOCAL IS VOCAL
- Freeing Indian entrepreneurship and innovation from bureaucratic hurdles.
- Decentralised localism takes pride in local brands, emphasises resilience and flexibility, and encourages local capacity-building and indigenisation.
Commitment to privatisation
- There is an unapologetic commitment to privatisation of non-strategic public sector entities, opening up of new sectors like space to private investment, decriminalisation of most aspects of corporate law, greater flexibility in labour laws, and so on.
ABOUT THE PACKAGE
The first tranche
- ₹3 lakh crore collateral free loan scheme for businesses, especially micro, small and medium enterprises (MSMEs).
- Global tenders will not be allowed for government procurement up to ₹200 crore, as the goal is self-reliant.
- NBFCs, housing finance companies and microfinance institutions will be supported through a ₹30,000 crore investment scheme fully guaranteed by the Centre, and an expanded partial credit guarantee scheme worth ₹45,000 crore, of which the first 20% of losses will be borne by the Centre.
- Power distribution companies, which are facing an unprecedented cash flow crisis, will receive a ₹90,000 crore liquidity injection.
- Employee Provident Fund (EPF) support, provided to low-income organised workers in small units under the PMGKY is being extended for another three months and is expected to provide liquidity relief of ₹2,500 crore.
The second tranche-Migrant workers (₹3,500 crore)
- Free food grains for the next two months to migrant workers who do not have ration cards. This is an extension of the Pradhan Mantri Garib Kalyan Yojana.
- One Nation One Ration card to enable a migrant beneficiary to purchase grains from any ration shop in the country
- Extension of credit facilities for urban housing, street vendors and farmers.
- An interest subvention scheme for small businesses
- Affordable housing for migrants and urban poor via a scheme under PMAY and affordable rental housing complexes (ARHC) under PPP mode.
The third tranche- Agriculture sector (₹1,50,000 Cr)
- A central law to permit barrier-free inter-State trade of farm commodities.
- To ensure a legal framework to facilitate contract farming.
- Deregulating the sale of six types of agricultural produce, including cereals, edible oils, oilseeds, pulses, onions and potatoes, by amending the Essential Commodities Act, 1955,
- Allow private players to invest in inputs and technology in the agricultural sector.
- To build farm-gate infrastructure and support logistics needs for fish workers, livestock farmers, vegetable growers, beekeepers and related activities.
The fourth tranche- industry, aviation and space.
- To enhance self-reliance in defence production,indigenise defence production by banning the import of some weapons and platforms.
- The FDI limit in defence manufacturing under automatic route will be raised from 49% to 74%.
- Introducing commercial mining in the coal sector, liberalise the mineral sector, ease airspace restrictions.
- Encourage private involvement in space and atomic energy projects.
- ₹8,100 crore to be provided as a hiked 30% viability gap funding to boost private investment in social sector infrastructure.
- Power distribution companies in union territories will be privatised.
ANBA- REDESIGNING OF THE INDIAN ECONOMY
- Self-reliance is about resilience, leveraging internal strengths, personal responsibility, and a sense of national mission (or “Man Making” to use the late 19th century expression of Swami Vivekananda).
- Self-reliance also means a commitment to resilience at multiple levels — at a national level, an industry level, and at an individual level. For example, the government has indicated that it would provide various forms of incentives and protection to key industries — for example, inputs for the pharmaceuticals industry.
- From Globalisation to decentralised localism that takes pride in local brands, emphasises resilience and flexibility, and encourages local capacity-building and indigenisation.It’s not shutting off India from the world. It creates new openness to ideas, investment, and trade.
- Farm sector reform includes the scrapping of the ECA-APMC system which enables localised decision-making by farmers even as they can participate in a national common market or export to the global market. Similarly, traders can now invest in supply-chains and agri-businesses without the fear of being arbitrarily labelled a hoarder. The government still has a role but it is as an enabler, providing soft and hard infrastructure
- The incentive structure of defence procurement has been changed to encourage indigenisation even as foreigners are encouraged to manufacture in India.
- Resilience in individuals and vulnerable social groups, calls for the creation of safety nets. The effort to create a health insurance system (Ayushman Bharat), and the direct benefit transfer mechanism based on Jan Dhan-Aadhaar-Mobile (JAM).
- Labour reforms emphasise flexibility on the one hand but on the other hand are also pitching for more stringent norms for safety and working conditions.
Thus, ANBA is about standing up confidently in the world, and not about isolationism behind “narrow domestic walls”.
THE CHALLENGES OF ANBA
Financial limitations
- At present, there is no sure-shot way of knowing what will be the final level of government spending at the end of this financial year.
- Most calculations suggest that far from the promised level of 10% of the GDP — the actual government expenditure in the Atmanirbhar Bharat Abhiyan is just 1% of GDP.
- And we still don’t know if this 1% (of GDP) expenditure is over and above the Budgeted expenditure or will it be funded by expenditure cuts elsewhere.
Declined GDP
- In this pandemic situation India’s GDP will decline by 12.5% under the Base case scenario.
- To lift growth, the governments would have to spend more and counteract the natural downward spiral of the economy.
Demand Supply Gap
- Many economists have opined that the government stimulus tries to resolve only supply-side issues. There is nothing to generate demand. This could only be done by putting money in the hands of people.
Threat to trade liberalisation
- “Self-reliance” may reorient the economic structure towards ensuring “self-sufficiency” by falling back on the decades-old failed policy of import substitution.
- The shift towards protectionism, threatening to undo decades of trade liberalisation may be underway.
Mixing of RBI and Government
- The actions of RBI were included as part of the government’s fiscal package whereas government expenditure and RBI’s actions cannot be clubbed together.
Resource crunch
- India’s welfare state does not lack intentions but lacks resources. No amount of CSR, philanthropy, or government borrowing can provide the resources for the care of our weak, vulnerable, and unlucky that will flow from more productive cities, firms, and citizens.
AN OLD WINE IN NEW BOTTLE OR A NEW AGE OF SELF-RELIANCE
India has tried self-reliant policy since independence. Even during the Freedom Struggle Movement, there was Swadeshi Movement.
The past experiences have not been very encouraging especially since independence
1. The socialist pattern is seen as among the main cause of backwardness of the Indian economy
2. The phase of liberalisation is seen as Indian economy awakening
3. The recent initiative like ‘MAKE IN INDIA’ has not been very effective
Therefore, again talking about self-reliant seems to be an old wine in new bottle.
THE WAY FORWARD
It is not that if something has failed in past so it will fail again. Rather it should be taken more as a resolve by the people of India to work for a resilient India by making it more self-reliant rather than dependent. No country has grown without role of its citizen to make the country self-reliant. After the imitative of the ATMANIRBHAR BHARAT, now India has today created a capacity of producing 2 lakh PPE kits daily, which is also growing steadily from zero production of Personal Protection Equipment (PPE) before March 2020,
Additionally, India has demonstrated how it rises up to challenges and uncovers opportunities therein, as manifested in the re-purposing of various automobile sector industries to collaborate in the making of life-saving ventilators. The clarion call given by the Hon’ble PM to use these trying times to become Atmanirbhar (self-reliant) has been very well received to enable the resurgence of the Indian economy.
At the same time there should be continuity of the policy and the resolve. It should not be a crisis-ridden policy initiative rather it should be taken as a necessity if India wants to become a globally competitive economy, reduce its reliance on other economies and have its own innovation and technology especially for defence sector.
