General Studies II

Aatma Nirbhar Bharat

Context: Hon’ble Prime Minister Shri Narendra Modi announced a Special economic and comprehensive package of Rs 20 lakh crore – equivalent to 10% of India’s GDP on 12th May 2020. He gave a clarion call for आत्मनिर्भर भारत अभियान or Self-Reliant India Movement. He also outlined five pillars of Atmanirbhar Bharat – Economy, Infrastructure, System, Vibrant Demography and Demand.

Atma Nirbhar Bharat Abhiyan

The Atmanirbhar Bharat Abhiyan (meaning self-reliant India scheme) was announced in four tranches by the Union Finance Minister Nirmala Sitharaman in May 2020.

The economic stimulus relief package announced by the government is touted to be worth Rs.20 Lakh crores. This includes the already announced Rs 1.70 lakh crore relief package, as the PMGKY, for the poor to overcome difficulties caused by the coronavirus pandemic and the lockdown imposed to check its spread.

Five Pillars of a Self-reliant India

  • Bold reforms across sectors will drive the country’s push towards self-reliance.
  • To spur growth and to build a self-reliant India, Atmanirbhar Bharat Abhiyan rests on 5 important pillars.
    • Economy: contemplates not an Incremental change but a quantum leap so that we can convert the current adversity into an advantage.
    • Infrastructure: that can be an image of modern India or it can be the identity of India.
    • Systems: driven by 21st-century technology, and that is not based on old rules.
    • Democracy: a vibrant democracy that is the source of energy to make India self- reliant.
    • Demand: where the strength of our demand and supply chain is utilized intelligently.

Other Facts:

  • The 20 lakh crore worth package is almost 10% of the GDP of the country.
  • The package emphasizes on land, labour, liquidity, and laws.
  • The package includes measures across many sectors such as MSME, cottage industries, middle class, migrants, industry, etc.
  • Several reforms are announced to make India a self-reliant economy and mitigate negative effects in the future. Some of the reforms are:
    • Simple and clear laws
    • Rational taxation system
    • Supply chain reforms in agriculture
    • Capable human resources
    • Robust financial system

The reforms and stimulus measures under Rs 20 lakh crore package were subsequently elaborated by the Finance Minister in five  tranches:

PartsFocus AreasStimulus in Cr (Rs)
IMSME, EPF, Gareeb Kalyan, RERA, Credit  5,94,550
IIFarmers, Migrants  3,10,000
IIIAgriculture & Allied Sectors  1,50,000
IVCoal, Minerals, Aviation, Defense, Space,  Atomic Energy48,100
VEase of doing business, Health, Education
 Earlier measures like PMGKP  1,92,800
 RBI measures  8,01,603

Atmanirbhar Bharat Abhiyan – Tranche 1

The first tranche contained 16 specific announcements and they spanned across the MSME, NBFC, real estate, power sectors, etc.

Category Measures 
Employees/taxpayers Extended deadline for income tax returns for the financial year 2019-20 (due date pushed to 30 Nov 2020) The rates of Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) have been cut by 25% for the next year. EPF support, provided to low-income organized workers in small units under the PMGKY, is being extended for another 3 months. PF payments have been reduced from 12% to 10% for both employers and employees for the next 3 months.
MSMEsThe ₹3 lakh crore emergency credit line announced will ensure that 45 lakh units will have access to working capital to resume business activity and safeguard jobs. Provision of ₹20,000 crores as subordinate debt for 2 lakh MSMEs which are stressed or deemed non-performing assets. A ₹50,000 crore equity infusion is planned, through an MSME fund of funds with a corpus of ₹10,000 crores. The definition of an MSME is being expanded to allow for higher investment limits and the introduction of turnover-based criteria. Global tenders will not be allowed for government procurement up to ₹200 crores. The government and central public sector enterprises will release all funds due to MSMEs within 45 days.
NBFCsRs 30,000 crore special liquidity scheme, under which investment will be made in investment-grade debt papers of NBFCs. Partial credit guarantee scheme extended under which the govt. guarantees 20 percent of the first loss to the lenders — NBFCs, HFCs, and MFIs with low credit rating.
Discoms₹90,000 Cr. liquidity Injection has been announced.
Real EstateStates and UTs have been advised to extend the registration and completion date of real estate projects by six months.

Atmanirbhar Bharat Abhiyan – Tranche 2

The second tranche focuses on providing free food grains to migrant workers who do not possess ration cards.

Provision Details 
Free food grainsThe Centre will spend ₹3,500 crores for providing free food grains for migrant workers without ration cards for the next 2 months. This is an extension of the PMGKY.
Credit facilitiesStreet vendors will be given access to easy credit through a ₹5,000 crore scheme, which will offer ₹10,000 loans for initial working capital. Plans to enroll 2.5 crore farmers who are not yet part of the Kisan Credit Cards scheme, along with fish workers and livestock farmers, and provide them with ₹2 lakh crore worth of concessional credit. NABARD will provide additional refinance support worth ₹30,000 crores to rural banks for crop loans.
Subvention reliefSmall businesses who have taken loans under the MUDRA-Shishu scheme, meant for loans worth ₹50,000 or less, will receive a 2% interest subvention relief for the next year.
Affordable rental housingA scheme to build rental housing complexes through PPP mode would be launched under the existing Pradhan Mantri Awas Yojana (PMAY) scheme. Both public and private agencies will be incentivized to build rental housing on government and private land while existing government housing will be converted into rental units. The credit linked subsidy scheme for lower-middle-class housing under PMAY will also be extended by one year to March 2021.
One Nation One Ration Card SchemeBy August 2020, the ration card portability scheme will allow 67 crore NFSA beneficiaries in 23 connected States to use their cards at any ration shop anywhere in the country.
MGNREGAStates are directed to enroll migrant workers returning to their native places in the MGNREGA scheme.

Atmanirbhar Bharat Abhiyan – Tranche 3 

The third tranche of the economic relief package focuses on agricultural marketing reforms. Many of the reforms announced are long pending and are expected to have a positive impact on both the farmers and the consumers.

Provision Details
Inter-state tradePlans to enact a central law to permit barrier-free inter-State trade of farm commodities and e-trading.  This will allow farmers to sell produce at attractive prices beyond the current mandi system.
Contract farmingPlans to ensure a facilitative legal framework to oversee contract farming. This would provide farmers with assured sale prices and quantities even before the crop is sown and also allow private players to invest in inputs and technology in the agricultural sector.
Deregulating produceThe Centre will be 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. Stock limits will not be imposed on these commodities except in case of national calamity or famine or an extraordinary surge in prices. These stock limits would not apply to processors and exporters.
Agriculture infrastructureInvestment of 1.5 lakh crore rupees to build farm-gate infrastructure and support logistics needs for fish workers, livestock farmers, vegetable growers, beekeepers, and related activities.

Atmanirbhar Bharat Abhiyan – Tranche 4 & 5

The final tranche focuses on the sectors of defense, aviation, power, mineral, atomic, and space. There is a huge emphasis on privatization. 

Sector Provisions 
Defence Provisions for banning the import of some weapons and platforms to indigenize defense production. There is a provision for a separate budget for domestic capital procurement. This would help reduce the defense import bill and encourage domestic production. The FDI limit in defense manufacturing under the automatic route will be raised from 49% to 74%. Ordnance Factory Boards (OFB) would be corporatized and listed on the stock market to improve autonomy, efficiency, and accountability.
MineralsThe government monopoly on coal would be removed with the introduction of commercial mining on a revenue-sharing basis. The private sector would be allowed to bid for 50 coal blocks. Private players would also be allowed to undertake exploration activities.
Space Private involvement in space will be encouraged. A level playing field for private players will be created in the space sector, allowing them to use ISRO facilities and participate in future projects on space travel and planetary exploration. The government will ease geospatial data policy to make remote-sensing data more widely available to tech entrepreneurs, with safeguards put in place.
Aviation Six more airports are up for auction on private-public partnership mode, while additional private investment will be invited at 12 airports. Measures to ease airspace restrictions have been announced which would make flying more efficient. Rationalizing of the MRO (maintenance, repair, and operations) tax structure to make India an MRO hub.
Power Power departments/utilities and distribution companies in U.T.s would be privatized based on a new tariff policy to be announced.
Atomic Research reactors in PPP mode would be set up for the production of medical isotopes.

Earlier measures – Total Rs 1,92,800 Cr

  • 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

Measures taken by the Reserve Bank of India – Total Rs 8,01,603 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

Labour sector reforms

  • 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.

Agriculture Marketing Reforms to provide choices to farmers.

  • 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

Coal sector reforms

  • 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.

Self-reliance in defence production

  • 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.

Aircraft and airspace sector

  • 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.

Technology-driven education

  • 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

Ease of doing business related measures.

  • 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


Parallels with Swadeshi Movement and need for Self-reliance.

  • 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

Criticism of Atmanirbhar Bharat Abhiyan

  • 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.


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