The Covid-19 outbreak has brought the globalised world to a standstill. In pre-Covid times, we existed in a world where countries were used to importing all that they could not produce at home. Further, India’s economy has taken a massive financial hit during the lockdown imposed to prevent the spread of the coronavirus. This was aggravated by the vulnerability India has seen both on the economic front and on the borders.
Facing uncertain waters, the BJP-led Central government collected itself and decided to take strong measures to revive the economy via its flagship program called the “Atmanirbhar Bharat Abhiyan”, which translates to “Self-reliant India Mission”. The idea, apparently, was not to cut off imports drastically, but rather to introspect, evolve and uplift the industries here at home and make Indian goods popular amongst Indians again. As a step towards Atmanirbhar Bharat, on May 12, a special package was introduced by the prime minister to revive and protect the economy that has suffered a major setback due the pandemic.
The Atmanirbhar Bharat Abhiyan was aimed firstly at providing financial support to the most vulnerable classes of society such as daily-wage earners and secondly, at reviving cottage industries, MSMEs and local industries among others by laying emphasis on land, labour, liquidity and laws. Under the Abhiyan, a comprehensive economic package of Rs 20 lakh crore (approximately 10% of India’s GDP) was announced. The beauty of this Mission is that it concentrates on the revival of every sphere from demand and supply to manufacturing to bring the Indian economy back on track by focusing on the five “pillars”, namely economy, infrastructure, technology-driven systems, vibrant demography and demand.
The package’s core area of attention is MSMEs and agriculture activities and accordingly, the Union finance minister announced structural reforms in four tranches to pave the way for Atmanirbhar Bharat.
Tranche 1: These set of relief measures are worth Rs 5,94,550 crore and include funding as well as loan guarantees for MSMEs, NBFCs/HFCs, DISCOMS, contractors, real estate and salaried workers. Tranche 2: Worth Rs 3,10,000 crore with a focus on migrant workers, small farmers, street vendors and the poor. Tranche 3: Worth Rs 1,50,000 crore. The core focus is on agriculture and allied sectors like dairy, animal husbandry and fisheries so as to strengthen the overall farm sector.
Tranche 4: Worth Rs 48,100 crore with a focus on eight critical sectors—coal, minerals, defence production, airspace management, social infrastructure projects, power distribution companies, space sector and atomic energy. Direct benefit was given to more than 24 lakh MSMEs through the government’s policy of imposing strict limits on imported products like sports equipment, toys, chemicals, etc. It also gave a strong push to the Indian defence manufacturing industry by banning more than 101 imported products. Let us take a brief look at some of the benefits conferred by this policy on a few sectors.
1. MSMEs: The government will offer Rs 3 lakh crore as collateral free or unsecured loan to MSMEs with an annual turnover of Rs 100 crore or an outstanding loan of Rs 25 crore. Further, loans of Rs 20,000 crore will be given to stressed MSMEs. It will help resume businesses, strengthen the supply chain and reduce dependence on other countries.
2. Power distribution companies: The government will provide a Rs 90,000 crore bailout to cash-starved DISCOMS and independent power producers. Privatisation of DISCOMS functioning in Union Territories to strengthen as well as bring efficiency and thus provide stability to the stressed power sector.
3. Agriculture and allied sectors: NABARD will provide financing facility for funding agriculture infrastructure projects at the farm gate and for cluster formation across all levels. The financial assistance will focus on improving the farm gate infrastructure like warehousing, cold chains and post-harvest management infrastructure.
4. Civil aviation: The government will ease the restriction placed on utilisation of Indian airspace for commercial flights (currently 60% of domestic airspace is available), and will help these companies save in terms of operational costs.
5. Real estate: The government has extended the CLSS (Credit Linked Subsidy Scheme) for middle income households to March 2021. This will lead to investments of Rs 70,000 crore in the housing sector, thus boosting the ailing sector.
The GoI is taking steps to ensure the safety of the people and making sure we are well prepared to face the threats posed not only by Covid-19, but also by any similar possibility in the future. That India has the capacity to be self-reliant but only lacked appropriate economic policies and perhaps, motivation, is apparent from the fact that the nation went from zero production of Personal Protection Equipment kits in March to producing 2 lakh PPE kits daily.
As the world races to find a cure and vaccine for SARS-Cov-2, India is looking to be self-reliant in both development of the vaccine and its mass production. Called by some as the “pharmacy of the world”, India has the largest capacity to produce Covid-19 vaccines. It appears that ventilator production in the country has also been pumped up in the face of the pandemic. Several Unlock phases with easing of restrictions have been announced by the government to enable resumption of economic activities while maintaining abundant caution.
Rarely does it happen that one policy benefits multiple sectors. It’s not only about promoting domestic products and increasing value of the home currency, but also about realising the true potential of Indian brands and making them global. This booster shot is the Centre using a certain percentage of the GDP and proportionately distributing the amount across a variety of sectors of industry and society. What is also interesting is the manner in which the idea of a self-reliant India has resonated with the citizens of the country. It appears that the government has been successful in awakening patriotism in its citizens in order to boost demand for local-made products.
It’s the basics of economics that demand leads to supply and this has given a renewed motivation and incentive to small-scale industries and MSMEs to shine and make a better market for themselves and create more jobs. As the government instils confidence in its citizens and nudges them towards being self-reliant by arming them with the resources to grow, there is hope after all that even in the dark times of Covid-19, there is a silver lining of aspirational prosperity, job creation, vamped-up production, quality manufacturing, protection of vulnerable classes and elevation of the middle classes.
India is today transitioning from a situation where it opened its doors to liberalisation and globalisation to one where it has to rearm itself to become a competitive manufacturing hub, a self-reliant country that can face war and pandemics, and a comfortable investment destination where the world can relocate to capitalise on its huge and talented manpower and geographic advantages. One cannot look at it as a crude strategy to close down China and replace it with India. It is more of a strategy to make India equally attractive, to make the world believe in the regulatory stability in our country and to revive the nation and truly put it in on the world map.
Vijayasai Reddy V
MP. YSRCP Parliamentary Party Leader and National General Secretary