The idea of self-reliance is not new. Since, the post independence period economists and governments have realized that to be truly free of European dominance, a country and its people should be free of economic reliance on Europe and U.S. However, globalization hindered this process, as every country became dependent on each other for different commodities.
The Aatma- Nirbhar scheme of the Modi government claims to be starkly different from the others launched by the previous policy- makers. However, will it be just another one of the ‘shower of schemes’ under this government’s regime? It is a little hard to believe that it won’t be just another one of those.
Will it have the same fate as of ‘Make in India’?
The failure of ‘Make In India’
It is common knowledge now, that the policy was casual and unresearched. The implementation of policies by all the other governments has been extensively criticized. However, Make In India was set to fail since its inception. All the reasons that lead to its failure pertained to a lack of planning.
i) Over ambitious: The present government has a habit of over-estimating, may it be revenue or growth rate. The policy aimed to achieve a growth rate of 12-14%, which was a little over the top, given that the average annual growth rates before 2014 were 6-7%.
ii) Ill-timed: Make in India was announced when there were uncertainties in the global economy and an ever rising trade protectionism. This further proves the point of very minimal research and planning that went into the formulation of the scheme.
iii) Too many sectors: The policy took up about 25 sectors of the economy. The growth of sectors which are starkly different from each other cannot be implemented under one scheme. This just proves the haste in which policies are announced.
Moreover the increase in the ease of doing business was not met by an equal rise in investments.
How prepared is our government, this time?
Just like all the other policies, the government seems to be ignoring the ones being affected by this policy. The only motto of this government seems to be ‘Words speak louder than actions’.
In the words of politician Mahua Moitra “This government has swapped the meanings of cowardice and courage.
In the name of bold reforms, the poor and marginalized are being ignored strategically.
The two important points that the government addresses through the Aatma Nirbhar Campaign are:
i) An increase in internal demand:
To increase internal demand, the purchasing power of the population has to be high. The problem here is, either the government ignores to address it or they just forget that the percentage of impoverished people in India is the highest among all the economic sections of the society.
Hence, it is easy to note that the purchasing power of this section will not contribute to the purchasing power. The rich in India constitute a very small section of the population, and hence, they alone cannot run the economy.
The middle class are the real purchasers. 15-40% of the GDP is run by the middle class. The need of the hour is to make the middle class, Aatm Nirbhar. However, The policies and the steps taken, are not in that direction. Aravind Subramaniam, a former Chief Economic Advisor of India, is of the opinion that Indian culture is a savings based culture and not investment based.
This means that increasing internal demand is going to be an uphill task, which should have been expressed before the announcement of an ambitious scheme.
The push towards innovation and investment should have come before the ambition of self-reliance.
The products such as mobile phones which are said to be made in India are only assembled here. The reason is the lack of skilled labor in the country. An increase in internal demand is only possible when the products are of reasonably good quality.
ii) Inward-looking Economy:
The world average for exports is 6%, while the dependence of the Indian economy on exports is 12.1%. This means that achieving an inward looking economy is easier said than done. Import substitution-blocking imports of manufactured goods- tends to be the solution in the minds of the our policy makers.
The idea of imports substitution might sound ideal but this too follows the trend of every other policy: ignoring the stakeholders. It results in a situation where the purchasers are again at a loss. They are paying more for something they used to get at half the rate, increasing the expenditure per person.
An inward looking economy will only be possible when the common man gets domestic goods at lower rates. However, the solution of this problem has always been an increase in the prices of imported goods by imposing unreasonably high tariffs.
This situation again, is doing nothing to empower the purchasers who have the power to make the country ‘aatma nirbhar’.
Some of the other reforms that AatmaNirbhar Bharat initiative aims to bring are:
Supply Chain Reforms for Agriculture
Rational Tax System
Simple and clear laws
Capable Human Resources
Strong Financial System.
Past experiences of the citizens vis-a-vis these ‘bold’ reforms is enough to prove how well it was thought out and implemented.
The truth about the 20 lakh crore economic stimulus:
The Indian government as a shocking surprise to economists all over India, announced a special economic package, under the Aatma Nirbhar scheme.
There are mainly two subdivisions of this stimulus;
i) Monetary stimulus: To aid the growth of certain sectors of the economy.
ii) Fiscal stimulus: Reduction of taxes.
This led to the concern whether a developing nation like India can afford such a large package. The truth about it is that the real cash outlay by the government is only 2-3 lakh crores, according to various rating agencies like Barclay’s.
This means, most of the economic stimulus that has been promised by the government is in the form of loans, it does not go from the governments revenue.
Moreover, the government has included the relief package measures by the RBI into this Economic Stimulus package. Never has a government included the financial measures taken by a central bank in its own package. What is more interesting is that the Relief Package announced by RBI amounts to 8 lakh crores.
The case of fiscal stimulus being provided is also quite misleading. There is no surety about it and no steps being taken by the government towards it. Rather, the prices of commodities like oilseeds are on the rise. Crude oil prices in the country are at an all time high, even though the procurement prices from the OPEC countries is the lowest in a decade.
So, it is nothing but a ‘grand loan fest’.
How can an average Indian citizen still keep hoping for ‘Acche Din’?
When the revenue outlook of the government is dented; when over spending is met by over-the-top taxes, how can one believe that the government is efficient enough to lead the country to self sufficiency. According to PM Modi: “The present government inherited a failed economy.” Playing the blame- game whenever things go wrong only proves how competent the government is.
Instead of focusing on the macro level of things when announcing big, ambitious schemes- attention should be given to the planning and groundwork of every scheme. Making sure that the infrastructure is well developed before the announcement of a plan is essential for any policy to succeed. However, the present government has never paid attention to this detail.
It would be an added bonus if the government learns to keep its promises to the common man. The people can only become self- reliant when the government serves as a role model for it’s citizens.
Aatma Nirbhar Bharat starts with an Aatma Nirbhar Sarkar.