The world’s largest lockdown imposed to prevent the spread of COVID-19 has severely affected domestic economic activity, as it accounts for about 70% of economic activity, investment, exports, and discretionary consumption. And would eventually take the country’s GDP growth down to the single-digit band for FY21E.
Therefore, to improve the current turbulent economic environment and boost the ailing economy, the present prime minister of India, Narendra Modi has the vision to make India a self-reliant nation. Its first mention came in the form of the ‘Aatmanibhar Bharat Abhiyan‘ or ‘Self-Reliant India Mission’ during the announcement of the cconomic package on Coronavirus pandemic on 12 May 2020.
This scheme or campaign aims to make 130 crore Indians self-reliant so that every citizen of the country can walk step by step in this hour of crisis and contribute to defeating the pandemic of Covid-19. Through this scheme, the economy of the country will get the support of 20 lakh crore rupees.
The focal point of the concept is to make the nation self-reliant with a greater focus on local manufacturers and service providers. It will strengthen the economy, improve living standards, and most importantly improve the trade deficit and the country’s fiscal balance. Making the country self-reliant in all areas from manufacturing to supply. This will help the country reduce its dependence on imports and may also boost exports. The fall in imports will reduce the trade deficit and ultimately lead to a trade surplus. And it will also ensure that the country can maintain and deal with any black swan incident that may emerge in the future.
According to Prime Minister Narendra Modi, fiscal stimulus will help revive every sector of the economy – from demand, to supply. The package will focus on land, labour, liquidity, and laws so that self-reliance can be achieved. The relief measures were announced in tranches by Finance Minister, Nirmala Sitharaman. These tranches were announced via press conferences from May 13, 2020, to May 17, 2020. The liquidity measures announced by the RBI in the package included Rs 8 lakh crore. The government will also provide a 100% guarantee of Rs 3 lakh crore in small business loans.
In the first tranche worth Rs. 5,94,550 Crore, Sitharaman announced a list of 15 measures. Emphasizing the PM’s concept of Aatma Nirbhar Bharat (Self-reliant India), she said that the focus of the package is on the factors of production – land, labour, liquidity, and others.
Micro, Small and Medium Enterprises
The main focus was on the MSME sector and its development as around 67 million MSMEs are operating in the non-agricultural sector in India and provides a large proportion of the population. The government will provide Rs 3 lakh crore as a collateral-free or unsecured loan to MSMEs with an annual turnover of Rs 100 crore or an outstanding loan of Rs 25 crore.
The loan period will be of four years duration with a moratorium period of 12 years. Additionally, stressed MSMEs will be provided with a loan of Rs 20,000 crore. The government has given a new definition for MSMEs where it has bridged the gap between manufacturing and service MSMEs and has also increased the investment limit in these units. A change in the definition will allow these units to expand and at the same time benefit MSME classification. It has withheld tenders from foreign companies up to Rs 200 crore, mainly to protect these small units from unfair competition.
The boost to the MSME sector will result in a large number of industries benefiting, most notably the automobile sector as most auto companies are MSMEs. It will also help businesses resume, strengthen the supply chain, and reduce dependence on other countries.
Power Distribution Companies
The government will provide 90,000 crore rupees in cash to Discoms and independent power producers. Discoms working in the Union Territories are expected to be privatized, to strengthen and bring efficiency across the region. Thus, provide stability to the stressed electric field.
Coal Sector And Minerals
The government will end the monopoly of Coal India Limited (CIL) by introducing commercial mining of coal. The government is focusing on reducing the country’s dependence on coal imports and being completely self-sufficient in coal production.
Agriculture And Allied Sectors
The fiscal support will focus on investment in agricultural gate infrastructures such as warehousing, cold chain, post-crop management infrastructure, dairy infrastructure as well as animal feed, beekeeping, and herbal and medicinal plants. The National Bank for Agriculture and Rural Development (NABARD) will facilitate funding for agricultural infrastructure projects at the farm gate and for cluster formation at all levels. Thus, addressing funding gaps in the supply chain and adding value means local products reach global markets.
It will launch Pradhan Mantri Matra Sampada Yojana for the development of marine and inland fisheries. This will help fill the gaps in the value chain and will also produce an additional 7 million tonnes of fish in the next five years and provide employment to about 5.5 million people. It will also focus on agri-marketing reforms such as barrier-free inter-state trade, an option to sell produce at attractive prices, and an e-trading platform for agricultural produce.
The government has come up with a special liquidity scheme of Rs 30,000 to invest in investment-grade credit cards of NBFCs, HFCs, and MFIs. The scheme will be fully guaranteed by the government and will be particularly beneficial for the housing sector. A partial credit guarantee scheme will also be allocated for NBFCs, where the first 20% of the loss will be borne by the government. Thus, it is necessary to provide the necessary liquidity support for the smooth functioning of the area.
The government will reduce restrictions on the use of Indian air space (currently 60% of domestic airspace is available) for commercial flights and will help these companies save around Rs 1,000 in terms of operating costs.
The government has extended the CLSS (Credit Linked Subsidy Scheme) to middle-income families by March 2021. This will lead to an investment of Rs 70,000 crore in the housing sector, which will already give a boost to the real estate sector. States and regulatory authorities have also been advised to extend the date of registration and completion of real estate projects under RERA to de-stress developers and ensure timely completion of projects. Growth in the real estate sector will increase demand for related sectors like steel, cement, transport, and will also generate employment.
Vocal For Local
Atmanbir Bharat has been called by some as a repackaged version of the Make in India movement using a new tagline like ‘Vocal for Local’. Other opposition members talked about how India framed its policies and made companies make India self-reliant – SAIL for steel production, IIT for domestic engineers, AIIMS for medical science, defence for research DRDO, HAL for aviation, ISRO for space, CCL. NTPC and GAIL in the area of Energy; criticism of advertising strategy. Some have recreated it for the “Fend for Yourself” campaign. The call for a boycott of Chinese products in India (and instead promoting an Aatm Nirbhar India), is practically difficult for India in the short term as India imports $ 75 billion worth of goods from China each year, to the extent that Parts of the Indian industry is dependent on China.
Starting this campaign, the government spearheaded a Swadeshi movement and resonated with the Sangh’s philosophy to enrich and revolutionize Indian products. However, in the desire of a self-reliant India, the government must decentralize its policies, take decisions for the rural mob and laborers, prioritize the poor and the underprivileged, formulate environmentally friendly policies to make India a self-reliant nation globally. In history, wonders happened when India considered Gandhi to be a model of self-reliance.
He expressed it as social dependence and mutual support in society. Unlike today, a virus has violated our freedom, but we will all be ‘assertive to the local’ and will be empowered with a new lifestyle of friendly and interdependence.