Atma Nirbhar Bharat Abhiyan
- In May 2020, Indian Prime Minister Narendra Modi announced 20 lakh crore rupees economic stimulus package named ‘Atmanirbhar Bharat Abhiyan‘, with the slogan ‘Vocal for Local‘.
- It was announced with the aim to make India self-reliant and also to provide a stimulus for the economy that was hit badly by COVID-19. This package is estimated to be 10% of GDP.
- While announcing this package, Prime Minister said that this package focuses on land, labour, liquidity & laws. He also mentioned that this will benefit labourers, farmers, honest taxpayers, MSMEs & cottage industry.
Atmanirbhar (Self-Reliant) Country: Understand the Concept
In fact, an Atmanirbhar (Self Reliant) country need not necessarily manufacture each and every product required by it. On the other hand, it will prefer manufacturing and processing more such products which it can do with expertise at low cost and the demand of which is globally more. At the same time, it cannot indefinitely depend on such countries who are dumping their low quality goods and are destroying the industrial growth of the importing country.
The concept of deriving benefits of scale, availability of natural and skilled human resources, expertise in manufacturing & processing the products in home country, judging the domestic and global demand, always help the countries arriving at the decision – whether manufacturing the products is beneficial or the required items should be imported while focusing on manufacturing and exporting the surplus items.
Recently, the government announced an economic stimulus package of Rs 20 lakh crore and big-bang systemic reforms under the Atma Nirbhar Bharat Abhiyan (self-reliant India).
The intended objective of this plan is two-fold. First, interim measures such as liquidity infusion and direct cash transfers for the poor will work as shock absorbers for those in acute stress.
The second, long-term reforms in growth-critical sectors to make them globally competitive and attractive.
Together, these steps may revive the economic activity, impacted by Covid-19 pandemic and create new opportunities for growth in sectors like agriculture, micro, small and medium enterprises (MSMEs), power, coal and mining, defence and aviation,etc.
However, there are several challenges that are needed to be addressed in order to fulfill the vision of this plan.
How India Achieves Self-Reliance in Any Situation? Examples
- An example of India marching on the path of self-reliance in any given situation is the PPE industry growth in two months. The PPE industry in India has become a ₹7,000 crore (US$980 million) in just two months from March to May 2020, the second largest after China.
- The largest fund in the country worth ₹21,000 crore (US$2.9 billion) was setup by the IIT Alumni Council with the aim of supporting the Atmanirbhar Bharat mission.
5 Pillars of Atma Nirbhar Bharat Abhiyan
India has 5 Pillars to Focus Upon to achieve the Atma Nirbhar Bharat mission and plans to focus on each of them:
- Growth of Economy
- Infrastructure Development
- Vibrant Demography
- Demand Increase
Impact of this Stimulus Package
- Primary Sector: The measures (reforms to amend ECA, APMC, Contract framing, etc) announced for the agricultural and allied sectors are particularly transformative.
- These reforms are steps towards the One Nation One Market objective and help India become the food factory of the world.
- These would finally help in achieving the goal of a self-sustainable rural economy.
- Also, the MGNREGA infusion of Rs 40,000 crore may help in alleviating the distress of migrants when they return to their villages.
- Secondary Sector: Given the importance of MSMEs for Indian economy, the Rs 3 lakh crore collateral-free loan facility for MSMEs under the package will help this finance-starved sector and thereby provide a kickstart to the dismal state of the economy.
- Also, as the MSME sector is the second largest employment generating sector in India, this step will help to sustain the labour intensive industries and thereby help in leveraging India’s comparative advantage.
- Additionally, limiting imports of weapons and increasing the limit of foreign direct investment in defence from 49% to 74% will give a much-needed boost to the production in the Ordnance Factory Board, while reducing India’s huge defence import bill.
- Tertiary Sector: The government has adopted a balanced approach in addressing concerns across sectors. For example:
- The newly launched PM e-Vidya programme for multi-mode access to digital online education provides a uniform learning platform for the whole nation, which shall enable schools and universities to stream courses online without further loss of teaching hours.
- Public expenditure on health will be increased by investing in grass root health institutions and ramping up health and wellness centres in rural and urban areas.
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- Issues Related to Liquidity: The package of Rs 20 lakh crore comprises both fiscal and monetary measures, the latter being in the nature of credit guarantees and liquidity infusions into banks and other financial sector institutions rather than the economy per se.
- Majority of the package is liquidity measures that are supposed to be transmitted by RBI to Banks and Banks to Citizens. This transmission wouldn’t be as smooth owing to inefficient transmission of monetary policy.
- Lack of Demand: The lockdown has lowered aggregate demand, and a fiscal stimulus is needed. However, the package, by relying overwhelmingly on credit infusion to boost the economy, has failed to recognise that investment will pick up only when people across income segments have money to spend.
- Lack of Backward and Forward Linkages: Unless the rest of the domestic economy is revived, the MSME sector may face a shortage of demand, and its production may soon sputter to a close.
- Burgeoning Fiscal Deficit: Government claims that the stimulus package is around 10% of India’s GDP. However, financing it would be difficult as the government is worried about containing the fiscal deficit.
- Difficulty in Mobilising Finances: The government seeks a disinvestment to mobilise the finances for the plan.
- However, the majority of Indian industries are already a bit debt-laden to take up the stake in PSUs.
- Further, it is difficult to borrow the foriegn markets, as rupee with respect to dollar is all time low.
Steps To Be Taken
- Enhancing Demand: The economic package for the country emerging out of the lockdown requires a stimulus enhancing demand across the economy.
- The best way for this is to spend on greenfiled infrastructure.
- Infrastructure spending uniquely creates structures that raise productivity and extends spending power to the section of the population most affected by the lockdown, namely daily wage labourers.
- Mobilising Finances: For financing of the stimulus package, India’s foreign reserves stand at an all-time high which could be strategically used to finance its needs.
- The rest may have to come from privatisation, taxation, loans and more international aid.
- Holistic Reforms: Any stimulus package will fail to reflect the trickle-down effect, until and unless it is backed by reforms in various sectors.
- Thus, Atma nirbhar plan also encompasses the unfinished agenda of holistic reforms which may include reforms in Civil services, Education,Skill and Labour, etc.
The economic crisis triggered by Covid-19 pandemic is much like the 1991 economic crisis, which was a harbinger of a paradigm shift via liberalisation, privatisation and globalisation. The post-Covid-19 era may usher in unprecedented opportunities provided the implementation deficit is adequately addressed.
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