The shocking news came out to the people when Prime Minister Narendra Modi announced a nationwide lockdown due to the threat of the Coronavirus strain. Looking beyond, almost 70% of economic activities came to total shut down as there was no scope of conducting business.
Exports from all over the world were prohibited, and so was the movement of goods and services to other parts of the country. Atma Nirbhar Bharat is for all those citizens who aim to be self-reliant and self-dependent and build a better future for themselves.
After suffering turbulent conditions, the current government announced the Atma Nirbhar Bharat Abhiyan to combat the circumstances of the ailing economy and released a relief package of Rs. 20 lakh crore equaling 10% of the overall GDP.
The prominent focus was to encourage the local manufacturers and give them the confidence to overcome the troublesome times in their lives. Not only would it improve the living standard but also outlook the opportunity to shine and rise again in the name of our nation.
Why is there a need for Atma Nirbhar Bharat, and what is the concept behind it?
The government pursues its efforts in making the country self-reliant in all aspects, starting from manufacturing and going on to supplying. The resurgence of the economic stagnation would lead to a rise in exports and hence improve the situation of ailing GDP. The decline in imports would eliminate the trade deficit resulting in a trade surplus. The relief package would focus on the four pillars of production and manufacturing, i.e. land, labor, liquidity, and laws, to become a reliant India.
POTENTIAL OF GROWTH IN INDIGENOUS MANUFACTURING
As uncertainty grew over the lack of business activities, the government decided to make the 21st century belong to India, as it mentions the five pillars on which Atma Nirbhar Bharat would be based on-
- Technology-driven system
- Vibrant demography
Due to the superiority of dwelling the Indian citizens into being self-reliant, and self-development, the government should itself be competent enough to take any course of action.
The prominent focus of the government should be on involving the following five pillars of Atma Nirbhar Bharat into our system;
- Economy – Quantum Jumps and not Incremental changes
- Infrastructure- One that represents Modern India
- Systems– Technology-driven systems
- Demography- Vibrant demography of the largest democracy
- Demand– Full utilization of the power of demand & supply
The bold reforms are the need of the nation to cater to the laborers, MSMEs, and other small-scale manufacturers. The subsequent ailing GDP has led to unemployment and scarcity of various sectors in the industry as the rigorous lockdown saw the sick units wind up their business activities.
Through the emergence of the five pillars of Atma Nirbhar Bharat, the country would be able to foresee any black swan event and tackle the problems accordingly. India’s export rate is as high as 12.1%, and to substantially end the dependence on other countries, the current government needs to spread awareness to people via campaigns helping them overcome the adversities.
Certain guidelines by the government are regulated to make the people understand the business model, following the announcement of the Atma Nirbhar Bharat Abhiyan. As per Prime Minister Narendra Modi, the fiscal stimulus will help retrieve profits from every sphere of the economy, including demand, supply, and manufacturing.
More often than not the ideas are either misinterpreted due to vested interests or are miscommunicated due to the involvement of intermediaries. What could be the impact of such an arduous situation is still unknown, as people are working on their instincts without having any particular knowledge about the Abhiyan.
SCOPE OF SELF RELIANT INDIA
Prime Minister Modi’s on the eve of 12 May 2020 resonates in the Indian mind as the idea resembles the speech made during the launch of the “Make in India” campaign. Both the concepts have their methodologies, as they were conceived in different situations.
The relief package was purview for reviving the stagnant economy amid the siege by the Coronavirus epidemic. The SELF RELIANT goal would improve the supply chain reforms of distinctive sectors including agriculture, telecommunications, automobile, and many others.
The scope should be followed with the right vision and the rights decisions to gain momentum in hijacking a dominant share in the global economy. The speech presented in the wake of the pandemic made clear the dual objectives that the government looks to serve the industries and manufacturers:
- The resurrection of the moribund Indian economy through fiscal measures
Reducing the tariffs and non-tariff rates by employing barriers to protect the nascent domestic economy. Import substitution played a vital role in reawakening the languishing system.
- Transforming the economy into being self-reliant by overhauling job employment for the needful.
Most of the employees in the private, as well as the public sector, were furloughed from the jobs due to lack of supply and income in the debilitated industries. Post-lockdown industries picked up speed in their pursuit towards recovery and thus recalling the need for demand and supply factors.
The need for production unleashes more potential for individuals to work with as it requires utmost diligence, and a unique set of skills to maximize the given opportunities.
Many attempts have been made in the past to insulate the economy from the global world, but the states are now mulling the idea of import substitution as we don’t prevail in the categories of the ascendant economy to encourage foreign investment.
Atma Nirbhar Bharat Stimulus Package
When the Atma Nirbhar Bharat Abhiyan was announced, the government focused on the following five tranches in the stimulus package. Finance Minister Nirmala Sitharaman declared the relief measures in Tranches which are as follows-
Business including MSMEs
Relief measures worth Rs 5,94,550 crore were given away, which included loan guarantees for MSMEs along with fundings.
Loans were provided for the short-term with low-interest rates for several organizations including NBFCs/HFCs, discoms, contractors, real estate, and salaried workers.
Poor, including farmers
A relief package worth Rs 3,10,000 crore was provided with a prime focus on migrant workers, small farmers, street vendors, and extremely poor people.
During the pandemic, the agricultural activities were showing signs of successive failures and hit the sector very badly. Hence, the government decided to uplift the economy by providing a relief stimulus package worth Rs 1,50,000 crore. The persistence of the farming sector was also rewarded as animal husbandry, and fisheries secured ample amounts from the government.
New horizons of growth
Measures worth Rs 48,100 Crore were granted, with the aim of uplifting 8 critical sectors: Coal, Minerals, Defence Production, Airspace management, Social Infrastructure Projects, Power distribution companies, Space sectors, and Atomic Energy.
Government reforms and enabler
Governments provide the investors with a golden chance in taking an active interest in its framework, as it introduces the next phase of Ease of Doing Business Reforms for substantially increasing the Doing Business Report(DBR) ranking.
The measures depicted a streamlining process of permittance and clearance, self-certification, and third-party certifications. Among other things included in the process, the government enlists a mission to ease the registration policies and swift disposal of commercial disputes.
Government reforms should be according to the capacity of resources in a country, as exceeding the expectations would result in dejection.
Sectors to receive the maximum support in upliftment-
- Micro, Small and medium enterprises-
About 67 million MSMEs operate in the non-agricultural sector of India. These enterprises cover a large proportion of the population and provide sustenance for each individual.
The government will offer 3 lakh crore as collateral-free or unsecured loans to the MSMEs with an annual turnover of Rs 100 crore.
The government has amended the definition of MSMEs, parting away from the distinction between manufacturing and service MSMEs, and thus increasing the limit for investment.
- Agriculture and farming sector-
NABARD will ensure financial funding for massive agricultural infrastructure projects at the farm fate and cluster formation across all platforms. Addressing the fund gaps in the supply chain, and also making indigenously based products to enable value additions, and expand the reach of the domestically produced goods to the global markets.
This scheme would enhance the level of fish production up to 70 lakh tons in the next five years, as it welcomes the rejuvenation of new people with almost 55 lakh seats left vacant.
- Real Estate-
Credit rates hold a great position in regulating the valuation of real estate. The government has barred all the restrictions by extending the CLSS(Credit Linked subsidy Scheme) for mediocre households till March 2021.
Eventually, this would lead to the injection of investments worth Rs 70,000 crore in the housing sector, thus boosting the ailing real estate industry.
SHORTCOMINGS OF THE ATMA NIRBHAR BHARAT ABHIYAN
The Self-reliance goal implementation has been improper in many ways, as the focus of the government was to avail the benefits beforehand without convincingly giving proper time to the industries to grow in valuation and maintain a systematic functioning of the activities. The citizens of India are much result-oriented and do not primarily focus on getting the process right.
Finance Minister Nirmala Sitharam’s speech was a longstanding hope of optimism, which soon turned into disappointments, as the government looked to boost the supply aspect of things disregarding the high demand of unraveling more production lines to the ailing sectors.
The government should have put more emphasis on forwarding cash support rather than availing the facilities of loans. The relief packages seem to benefit the government indirectly as they have not constructed a demonstrative setup to reduce tariffs across the country.
MSMEs would be at a higher default position than what they are placed at, resulting in the declaration of NPAs accounts through suffering from bad-debts of loans acquired from the government.
The banking PSUs are constantly reeling under the bad debt issue and may disclose more deterioration in their asset quality in the upcoming weeks or months. The government expenditure incurred in the relief package constitutes only 1% of India’s GDP growth. The standalone measures won’t be sufficient enough to grow India’s demand sentiment in the economy.
Key TAKEAWAYS from the structural Model-
- The package engrossed in making India a self-reliant and self-dependent nation.
- Reducing the high rate of exports by deploying import substitution schemes. The effect of the same was not as constructive as expected.
- Corporate industries would have benefited if the government played smart with its approach in providing help, like giving direct benefits such as cash support and curtailment of GST payments.
- Due to the inclination in the prices, the dmand for the trending products has reduced as people have found cheaper alternatives resulting in the disarray of the chain system of the companies.
- The package was divided into 5 tranches, each of them requiring an immediate resolution for the shortcomings faced during the pandemic.