Aatma Nirbhar Bharat

 

• Pradhan Mantri Garib Kalyan Package for the poor – 1,70,000 Cr:
  • Insurance cover of Rs 50 lakh per health worker
  • Free cereals and pulses, gas cylinders to poor families for 3 months
  • Direct cash transfer via Jan Dhan account to poor women.
  • PF credits to low-income workers and advances from EPF.
  • Collateral-free lending for Women SHG up to Rs 20 lakhs.
• Revenue lost due to tax concessions – 7,800 Cr
• PM’s announcement in the health sector – 15,000 Cr

 

 

• RBI enhanced liquidity by Rs 1.37 lakh crores by reducing CRR
• Targeted long-term repo operations of Rs 1 lakh crore.
• Raised the Ways and Means advance limits of the state governments by 60 percent.
• Raised borrowing limits of banks under the marginal standing facility to avail additional Rs 1.37 lakh crore.
• Special refinance facilities to NABARD, SIDBI, and NHB
• Special liquidity facility for mutual funds
• Moratorium on loan repayments

 

 

• To avoid regional disparity in minimum wages, National Floor Wage to be introduced.
• Appointment letter to be provided to all workers to promote formalization.
• Occupational Safety & Health (OSH) code to cover all establishments engaged in hazardous work.
• Definition of the inter-state migrant worker to include migrant workers employed directly by the employer.
• ESIC coverage will be extended to all districts and all establishments employing 10 or more employees as against those in notified districts/areas only.
• Mandatory ESIC coverage for employees in hazardous industries with less than 10 employees.
• Introduction of re-skilling funds for retrenched employees.
• Provision for Social Security Fund for unorganized workers.
• Provision of gratuity on completion of one-year service as against 5 years.

 

 

• Now, farmers are bound to sell agriculture produce only to licensees in APMCs.
• A law will be formulated to provide choices to farmers to sell produce at an attractive price and enable barrier-free inter-state trade.
• The legal framework will be created towards contract farming and enable farmers to engage with processors, aggregators, large retailers, exporters in a fair and transparent manner.
• Risk mitigation for farmers assured returns and quality standardization to be an integral part of the framework

 

 

• Introduction of commercial mining in the coal sector through a revenue-sharing mechanism instead of the regime of fixed Rupee/tonne
• To lower impact on the environment, coal gasification and liquefication will be incentivized through rebate in revenue share
• Coal Bed Methane (CBM) extraction rights to be auctioned from Coal India Limited’s (CIL) coal mines.

 

 

• Ban the import of several weapons and a separate budget provisioning for domestic capital procurement to help reduce the huge defence import bill.
• Corporatize the Ordnance Factory Board to improve autonomy, accountability, and efficiency.
• Increased FDI limit in the defence manufacturing under the automatic route from 49 percent to 74 percent.

 

 

• Restrictions on the utilization of the Indian airspace will be eased so that civilian flying becomes more efficient.
• Development of world-class airports through PPP,
• The tax regime for Aircraft Maintenance, Repair, and Overhaul ecosystem rationalized and the convergence between the defence sector and the civil MROs will be established to create economies of scale.
• Boosting private participation in space activities. The private sector will be allowed to use ISRO facilities and other relevant assets to improve their capacities.

 

 

• PM e-VIDYA — a program for multi-mode access to digital/online education — will be launched. The program will comprise one earmarked TV channel per class from 1 to 12. Special e-content will be prepared for visually and hearing impaired. Top 100 universities will be permitted to automatically start online courses by 30 May 2020.
• Manodarpan, an initiative for psycho-social support of students, teachers, and families for mental health and emotional wellbeing, will also be launched simultaneously.
• National Foundational Literacy and Numeracy Mission will be launched in December 2020 to ensure that every child attains learning levels and outcomes in grade 5 by 2025

 

 

• The minimum threshold to initiate insolvency proceedings raised to Rs 1 crore
• Suspension of fresh initiation of insolvency proceedings up to one year.
• Special insolvency resolution framework for MSMEs to be notified soon.
• Decriminalization of violations under Companies Act
• Allow direct listing of securities by Indian public companies in permissible foreign jurisdictions.
• The government will announce a new, coherent policy where all sectors are open to the private sector while public sector enterprises (PSEs) will play an important role in defined areas.
• A list of strategic sectors requiring the presence of PSEs in the public interest will be notified.
• In strategic sectors, at least one enterprise will remain in the public sector but the private sector will also be allowed.
• In other sectors, PSEs will be privatized

 

 

• The call self-reliance can be compared with the Swadeshi movement and we can find that it is a relatable response to the evolving political and economic currents in a globalized world.
• If Swadeshi was the rejection of the colonial exploitation of India and criticism of the Western model of Capitalism based economic growth, Atmanirbhar Bharat is an attempt to find India’s legitimate place in a rapidly changing world.
• Atmanirbhar Bharat like the Swadeshi movement is a program that is against the unrestricted import of Western thinking and economic models but is not averse to technology. It stands for modernization, but without unbridled Westernisation.
• The clarion call ‘Vocal for local’ needs to seen as a response to the anticipated changes geopolitical order in the post-COVID world.
• The COVID crisis has shown the failings of multilateral and regional institutions and also the ineffectiveness of trade barriers and standalone economic models.
• Indian entrepreneurship must be freed from the shackles by adopting suitable governance models and reforming laws.
• The ‘new Swadeshi’ must transform local industries to connect the ever-changing global trade structure and lead to ‘glocalization’ that serves local and global markets.
• Some early signs of this development were seen during the COVID crisis where India’s position as the ‘pharmacy of the developing world’ was cemented. The importance of self-reliance was also seen in the self-sufficiency for food especially cereals, the lack of which would have exasperated the current crisis

 

 

• Inflated figures
  • Several opposition leaders pointed out that as per the calculations by many economists, the actual government expenditure in the Atmanirbhar package is just 1%.
  • 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.
• Need to spend more
  • The Indian economy likely to contract and the Gross Value Added across sectors is likely to fall. According to an assessment by Prof N R Bhanumurthy of the National Institute of Public Finance and Policy (NIPFP), India’s GVA will contract by 13% this year under the Base case scenario (The Base case scenario refers to a scenario where governments bring down their expenditure in line with their falling revenues to maintain their fiscal deficit target).
  • Several economists suggest that the government needs to spend much more to prevent an economic contraction. Higher public spending will come at the cost of higher levels of fiscal deficits and higher inflation, but a growth contraction will cause even worse outcomes in the form of widespread economic ruin.
• Credit easing will not work immediately
  • Direct expenditure by a government such as direct benefit transfer or by construction will mean that money reaches the people.
  • But credit easing by the RBI is not direct government expenditure and banks will be hesitant to lend the money available with them.
• Nothing to stimulate demand – 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.
• Modest MSME package – according to opposition leaders, the MSME package was modest and the measures were skewed in favour of the larger ones. Moreover, the unorganized sector was not catered to.
• Insufficient support for the state governments – the state governments which are at the forefront of fighting the pandemic have not been supported adequately via fund transfers.
• A remodelling of Make in India Campaign – The self-reliant India campaign is criticized by many as a re-modelling of the Make in India Campaign – which didn’t produce expected results – with some addon-on.
• The philosophy of self-reliance: India, like most countries, has been following the principles of globalisation since the LPG reforms in 1991. Even though the globalised world shrank into isolated countries in the COVID19 period, it is yet to be seen if self-reliance can be adopted as a viable economic policy by a country like India, post-COVID

 

 

The strategy of Atmanirbhar Bharat Abhiyan seems to give a strong supply-side push by boosting the availability of capital on easy terms and through supporting agriculture and business sectors.

The additional allocation to MNREGA will help in productively employing returning migrants.

States are now allowed to borrow within a higher limit but with clear reform conditionalities.

The demand-side stimulus via deficit financing is not considered for the time being.

But it cannot be denied that there is a desperate need for demand stimulus now. People’s purchasing power needs to be increased and demand for industrial products and services must be created.

Income support to migrant workers and the urban poor is also an immediate concern.

Thus, even with falling revenues, a deeper fiscal stimulus could have been attempted.

Several of the reform measures like opening up more sectors for private participation and enhancing foreign direct investment are not to be seen as part of COVID relief but long-term structural changes. The effect of these measures will have to be watched carefully.