ONLY ACTIVE GOVT SCHEME 2020: ATMANIRBHAR BHARAT
Amid the COVID-19 scenario, following the lockdown and condition of the economy, central government schemes 2020 were announced by Prime Minister Modi in his address to the nation on 12.05.2020. A prominent part of this announcement as an economic stimulus package for Rs 20-lakh-crore (estimated at 10% of the GDP), towards building an Atmanirbhar Bharat, or a self-reliant, resilient India which will cater to various sections including cottage industry, MSMEs, labourers, middle class, industries, among others.
Now, for those who want to understand what help this did to their business and as many thought, “Is my industry inclusive?” or “how will I be affected”, well, in this article, you can read the details of the Atmanirbhar Bharat Abhiyan, the full-fledged economic stimulus package announced by the Union Government.
FIVE PILLARS OF ATMANIRBHAR BHARAT OUTLINED
- The first pillar of Atmanirbhar Bharat is the economy, which has been the most affected during this crisis, with ATmanirbhar Bharat, Govt aims to create an economy that brings Quantum Jump rather than Incremental change.
- Infrastructure: Under this mission, the next thing to be focused on will be infrastructure that became the identity of modern India.
- System: They focused on a technology-driven system which can fulfil the dreams of the 21st century; a system not based on the policy of the past century.
- Demography: India enjoys the status of the world’s largest democracy which can be a source of energy for self-reliant India.
- Demand: While in lockdown, the cycle of demand and supply chain has been disrupted. It is is the strength that needs to be harnessed to its full potential.
IMPACT OF THIS STIMULUS PACKAGE
There are many sectors and industries impacted by the Atmanirbhar Bharat Scheme, let’s start with the primary sector and work our way up:
- In each tranche of the central government scheme, there are measures. The one affecting the primary sector is the first three tranches with reforms to amend ECA, APMC, contract framing, etc announced for the agricultural and allied sectors are particularly transformative.
- Focused towards the mission of One Nation One Market objective and support India to become the food factory of the world, these reforms in the sector would add up in achieving the goal of a self-sustainable rural economy.
- Moving ahead, now this secondary sector has various major impacts as well given the importance of MSMEs for the Indian economy. Thus, the Rs 3 lakh crore collateral-free loan facility for MSMEs under the package will help this finance-starved sector and thereby provide a kickstart to the dismal state of the economy.
- MSME sector is the second-largest employment generating sector in India, this crucial step will help to sustain the labour-intensive industries and thereby help in leveraging India’s comparative advantage.
- Also aimed at limiting imports of weapons and increasing the limit of foreign direct investment in defence from 49% to 74% is a reform that will give a much-needed boost to the production in the Ordnance Factory Board while reducing India’s huge defence import bill.
- Moving to the last sector, tertiary sector government has adopted a balanced approach in addressing concerns across sectors. For example, the newly launched PM e-Vidya programme for multi-mode access to digital online education provides a uniform learning platform for the whole nation, which shall enable schools and universities to stream courses online without further loss of teaching hours.
- Again, in the tertiary sector, public expenditure on health will be increased by investing in grass-root health institutions and ramping up health and wellness centres in rural and urban areas.
CHALLENGES OF ATMANIRBHAR MISSION
Every government scheme has some drawbacks to deal with and here are some of the challenges Atmanirbhar Bharat:
- Liquidity: There will be issues related to liquidity in this package of Rs 20 lakh crore comprises both fiscal and monetary measures, the latter being like credit guarantees and liquidity infusions into banks and other financial sector institutions rather than the economy per se. There will be a lot of liquidity measures that are supposed to be transmitted by RBI to Banks and from Banks to Citizens which wouldn’t be as smooth owing to the inefficient transmission of monetary policy.
- Lack of Demand: There is no doubt that the lockdown has lowered aggregate demand, and a fiscal stimulus is needed. However, if we look at the package it is relying overwhelmingly on credit infusion to boost the economy and has failed to recognise that investment will pick up only when people across income segments have money to spend.
- Lack of backward and forward linkages: Unless the rest of the domestic economy is revived, the MSME sector may face a shortage of demand, and its production may soon sputter to a close.
- Financing: Financing a stimulus package is around 10% of India’s GDP will be a difficult task as the government is worried about containing the fiscal deficit. Also, as the government seeks disinvestment to mobilise the finances for the plan. , there are still a majority of Indian industries are already a bit debt-laden to take up the stake in PSUs. When it comes to borrowing money from the foreign markets, it is difficult as rupee concerning dollar is an all-time low.
STEPS TO BE TAKEN UNDER ATMANIRBHAR MISSION
- Increasing Demand: Due to COVID-19 and lockdown, the demand has been hampered, this economic package for the country emerging out of the situation requires a stimulus enhancing demand across the economy, a way to spend on greenfield investment. The infrastructure spending is a great area to raise productivity and productivity and extends spending power to the section of the population most affected by the lockdown, namely daily wage labourers.
- Mobilising Finances: To finance the stimulus package, India’s foreign reserves stand at an all-time high which could be strategically used to finance its needs while the rest may have to come from privatisation, taxation, loans and more international aid.
- Holistic Reforms: While the focus is to revive the economy, any stimulus package will fail to reflect the trickle-down effect, until and unless it is backed by reforms in various sectors, which this one aims to as it encompasses the unfinished agenda of holistic reforms which may include reforms in Civil services, Education, Skill and Labour, etc.
The central government policy to address the economic crisis triggered by Covid-19 pandemic which resembles the 1991 economic crisis, which was a harbinger of a paradigm shift via liberalisation, privatisation and globalisation.