“A nation’s strength ultimately consists in what it can do on its own, and not in what it can borrow from others.” – Indira Gandhi.
Self-Reliance, one thing which is common in all developed nations and a thing that a developing nation wants to achieve. One of those developing nations which are striving to make themselves self-reliant is India. The battle to become self-reliant is not new but started back from the independence itself. At that time, India was the largest economy in South Asia, the self-reliance in the state heavy industries and strategic sectors in the post-independence decades put India before most of the developing world.
However, in the 1970s and 1980s, India did not modernize these industries to move up the technological ladder. Little was done to modernize light industries. The industrial ecosystem was held hostage to the license-permit-quota system that hampered innovation. As a result, self-reliance gave way to corruption and dependence on imports. A major turn came in 1991 after economic liberalization in India was initiated in 1991 by Prime Minister P. V. Narasimha Rao and his then-Finance Minister Dr. Manmohan Singh.
1) Atmanirbhar Bharat and the idea behind it
At a time when the world was plagued by the deadly pandemic, PM Narendra Modi launched a campaign which was meant to convert this crisis into an opportunity and strengthen India’s fight by becoming Aatmanirbhar or self-reliant.
-> There are five pillars of Atmanirbhar Bharat which focus on:
- Vibrant Demography and
-> The Five phases of Atmanirbhar Bharat are:
- Phase-I: Businesses including MSMEs
- Phase-II: Poor, including migrants and farmers
- Phase-III: Agriculture
- Phase-IV: New Horizons of Growth
- Phase-V: Government Reforms and Enablers
PM Modi emphasized the fact that it is time to voice our local products and make them global. A special economic package was created as part of this campaign. Established by the government, which will benefit various segments including the craft industry, micro, small and medium-sized enterprises (MSMEs), workers, the middle class and industry. The economic package announced by the Prime Minister, along with various packages launched during the lockdown period, amounts to around 20 lakh crore rupees ($ 283.73 billion), which was roughly 10 percent of India’s GDP. It was expected to support and empower different parts of the country and give new impetus to the development of the country in 2020.
In order to express the determination of an independent India, land, labor, liquidity and laws were included in this package. Minister of Finance & Corporate Affairs, Ms. Nirmala Sitharaman, made all the announcements related to several sectors on different days, divided into five tranches, and provided detailed information on the steps the government is taking.
2) Division of package for different sectors in Atmanirbhar Bharat
- First tranche – Rs 5,94,550 crore
The first aid installment announced by Nirmala Sitharaman focuses on empowering the backbone of the Indian economy: MSMEs, which employ around 11 billion people and have a GDP share of around 29 percent. This included unsecured loans of Rs.3 billion and a capital injection of Rs. 50,000 billion for MSMEs through the funds
- Second tranche – Rs 3,10,000 crore
Nirmala Sitharaman’s second installment of measures was targeted at migrant workers and street vendors. The minister introduced ‘one nation one ration card’ card so migrant workers can buy ration from any ration depot in the country. Around 50 lakh street vendors will have access to a special credit facility of Rs 5,000 crore within an initial working capital of Rs 10,000. Around 2 lakh crore rupees will be delivered to farmers via kisan credit cards, while 2.5 crore farmers, including fishermen and animal husbandry farmers will be able to attain institutional loans at a preferential rate.
- Third tranche – Rs 1,50,000 crore
The third tranche worth Rs 1.5 lakh crore aims at agriculture and related sectors, including dairy, livestock and fisheries, as the government proclaimed measures to toughen the broad agricultural sector.
- Fourth and fifth tranches – Rs 48,100 crore
The fourth installment of the Rs 20 Lakh Crore package included reforms for sectors such as coal, minerals, defense production, airspace management, airports, MRO, UT distributors, space and nuclear energy.
3) Sectors to benefit from Atmanirbhar bharat.
I. MICRO, SMALL, AND MEDIUM ENTERPRISES
Micro, Small, and Medium Enterprises have played a vital role in Indian economy. It has contributed one third to the GDP of India and also provided employment to large sections of society. The sector is source of livelihood to 110 million people. With the current phase of Atmanirbhar Bharat these MSME’s has become more significant to India’s financial and economic sector. Acknowledging the importance of this sector it would contribute to 50 million jobs and half of India’s GDP in the coming five years.
Benefits of MSME’s under Atmanirbhar Bharat:
- Collateral free loans- The commencement of collateral free automatic loans will assist the existing borrowers and this will also give the fuel restart to the business operation.
Some of the key highlights of this benefits are-
-> According to bank policies, the current borrowers should have the standard ratings and turnover of rs.100 crore.
-> Four years of loan tenure and 12 months on principle payment.
-> No additional collateral is required.
- Equity Infusion- Government is going to setup a fund for funds of 10,000 crore to overcome this situation of pandemic. FOF will be operated through a Mother fund and few Daughter fund. Through these funds the MSME’s can expand their size and capabilities. This will also encourage MSME’s to get listed on the board of stock exchange.
- Debt for stressed MSME’s- To support MSME’s the central government will provide Rs. 20,000crore as subordinate debts. The infusion of fresh capital into the business will reduce the burden on MSME’s and will benefit two lakh MSME’s.
II. Agriculture and Fisheries
Agriculture is the most important sector of Indian economy. It contributes to 18% of GDP and provide employment to 50% of countries workforce. Government towards improving this sector has released two major initiatives Pradhan Mantri Kisan Samman Nidhi Yojana (PM-KISAN) and Agriculture Infrastructure Fund this will help to improve the financial and agriculture status of farmer.
Benefits of agriculture under Atmanirbhar Bharat:
- Pradhan Mantri Kisan Samman Nidhi Yojana (PM-KISAN)- Under this scheme financial benefit of Rs 6,000/- is provided to beneficiary farmers and is payable in three equals that is 4 monthly installments of Rs 2,000/-. However, under this scheme an amount of more than 17,000 crore has been transferred to 8.5 crore beneficiary farmers.
- Agriculture Infrastructure Fund- The objective of this scheme is to drive investment across the agricultural chain. This scheme will allow farmers to store their produce till they get better price and affordable post-harvest infrastructure. Farmers and other stakeholders will have access to financing 3% interest and credits from governments and this will help them to enhance their product value.
III. Coal Mining Reforms
India being the fourth- largest producer of coal in the world. In the vision to build Atmanirbhar Bharat a reform to promote commercial coal mining in India has been announced. Opening up of these sectors will expand world class production capacity and provide top product services with global supply chain.
Benefits of Coal mining under Atmanirbhar Bharat:
- Forty-one coal mines are opened for auction and there are no end restrictions on the coal production for these mining. Bidders will not require any previous experience in coal mining they just have to put up sufficient amount of money. Mining plan approval will be provided in 30 days rather than 90 days. Coal mining will be determined through a National Coal Index for different grades of coal.
- These 41 mines are likely to produce 225 million tones annually and Rs. 33,000 capital expenditure to get these mining going. Additionally, state government will generate more than 20,000 crore per year in royalties from these mining. This will generate direct and in direct jobs for more than 3 lakh employers and is expected to generate fund of Rs. 112 crores for the District Minerals Foundation Fund.
IV. Non-Banking finance (NBFCs), Housing finance companies (HFCs), Microfinance institutions
For the Non-banking finance companies (NBFCs), Housing finance companies (HFCs), Microfinance institutions (MFIs) Ministry of finance has announced following measures:
- Special liquidity scheme worth Rs. 30,000 crores
- Partial credit guarantee scheme worth Rs. 45,000 crores
Benefits of these schemes under Atmanirbhar Bharat:
- Main objective of Special liquidity scheme is to provide liquidity support to MSMEs that are impacted due to this pandemic. Under this scheme investments will be made both in primary and secondary transactions in investment papers of NBFCs, HFCs, MFIs. These securities will be fully guaranteed by government. This scheme will ensure operational continuity and promote leading MSME sector.
- Partial credit guarantee scheme is for NBFCs, HFCs, MFIs, having low credit rating and provide liquidity to leading MSMEs and individual and first 20% loan will be given by the government. This also helps the MSMEs to avoid distress sale of their assets for meeting immediate funds.
This campaign can reach its epitome if supported well by the government. Keeping in mind the increasing incursions by China and India’s dependence on it, the success of the campaign is now more in need than ever. If the government is solemn about instigating this economic philosophy, it must clearly list the areas that need improvement to make Indian manufacturing competitive. Only then will entailed policies get outlined and implemented to bring about the change.