Atmanirbhar Bharat Abhiyan:
Opportunities & Challenges
Dr. Ranjeet. V. Tehra
B.E(Electronics) , MBA(Marketing),MBA(HR), NET, Ph.D.
Assistant Professor
School of Commerce and Management Sciences, SRTMU, Nanded
Atmanirbhar Bharat
Atmanirbhar Bharat (is the vision of the Prime Minister of
India Narendra Modi of making India a self-reliant nation.
The announcement of the Atmanirbhar Bharat came as
coronavirus pandemic related economic package on 12 May
2020. This self-reliant policy does not aim to be protectionist
in nature and as the Finance Minister clarified, "self-reliant
India does not mean cutting off from rest of the world".
The law and IT minister, Ravi Shankar Prasad, said that self-
reliance does "not mean isolating away from the world.
Foreign direct investment is welcome, technology is welcome
. self-reliant India is an idea that translates to being a bigger
and more important part of the global economy."
What is the Scheme:
The government announced an economic stimulus
package of Rs 20 lakh crore and big-bang systemic
reforms under the Atma Nirbhar Bharat Abhiyan
(self-reliant India).
The intended objective of this plan is two-fold.
First, interim measures such as liquidity infusion and
direct cash transfers for the poor will work as shock
absorbers for those in acute stress.
The second, long-term reforms in growth-critical
sectors to make them globally competitive and
attractive.
Compensatory Afforestation Management
and Planning Authority
Maintainence, Repair, Overhaul
Together, these steps may revive the economic activity,
impacted by Covid-19 pandemic and create new
opportunities for growth in sectors like agriculture,
micro, small and medium enterprises (MSMEs),
power, coal and mining, defence and aviation,etc
Impact of this Stimulus Package
Primary Sector: The measures (
reforms to amend Essential Commodities Act, APMC, Co
ntract framing, etc
) announced for the agricultural and allied sectors are
particularly transformative.
These reforms are steps towards the One Nation One Market
objective and help India become the food factory of the world.
These would finally help in achieving the goal of a self-
sustainable rural economy.
Also, the MGNREGA infusion of Rs 40,000 crore may help in
alleviating the distress of migrants when they return to their
villages.
Secondary Sector: Given the importance of MSMEs for
Indian economy, 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.
Also, as the MSME sector is the second largest
employment generating sector in India, this step will help
to sustain the labour intensive industries and thereby help
in leveraging India’s comparative advantage.
Additionally, limiting imports of weapons and increasing
the limit of foreign direct investment in defence from 49%
to 74% will give a much-needed boost to the production in
the Ordnance Factory Board, while reducing India’s huge
defence import bill.
Tertiary Sector: The 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.
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.
Issues Related to Liquidity: In this package of Rs 20 lakh crore , Majority of the
Associated Challenges
package is liquidity measures that are supposed to be transmitted by RBI to Banks and
Banks to Citizens. This transmission wouldn’t be as smooth owing to inefficient
transmission of monetary policy.
Lack of Demand: The lockdown has lowered aggregate demand, and a fiscal stimulus
is needed. However, the package, by relying overwhelmingly on credit infusion to
boost the economy, 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.
Burgeoning Fiscal Deficit: Government claims that the stimulus package is around
10% of India’s GDP. However, financing it would be difficult as the government is
worried about containing the fiscal deficit.
Difficulty in Mobilising Finances: The government seeks a disinvestment to mobilise
the finances for the plan.
However, the majority of Indian industries are already a bit debt-laden to take up the
stake in PSUs.
Further, it is difficult to borrow the foriegn markets, as rupee with respect to dollar is
all time low.
Steps To Be Taken
Enhancing Demand: The economic package for the country emerging out of the
lockdown requires a stimulus enhancing demand across the economy.
The best way for this is to spend on greenfiled infrastructure.
Infrastructure spending uniquely creates structures that raise productivity and extends
spending power to the section of the population most affected by the lockdown,
namely daily wage labourers.
Mobilising Finances: For financing of the stimulus package, India’s foreign
reserves stand at an all-time high which could be strategically used to finance its
needs.
The rest may have to come from privatisation, taxation, loans and more international
aid.
Holistic Reforms: Any stimulus package will fail to reflect the trickle-down
effect, until and unless it is backed by reforms in various sectors.
Thus, Atma nirbhar plan also encompasses the unfinished agenda of holistic reforms
which may include reforms in Civil services, Education,Skill and Labour, etc.
INDIA v/s CHINA
India Nominal GDP: $2.94 trillion
China Nominal GDP: $14.14 trillion
China is India’s one of the leading trade partners and constitutes
9 percent of India’s total export and 18 percent of total
merchandise imports.
Import dependency on China for a range of raw materials
(APIs(Active Pharma Ingred), basic chemicals, agro-
intermediates) and critical components (Auto, Durables, Capital
goods) is skewed. To give a flavour, out of the respective
imports, 20 percent of the auto components and 70 percent of
electronic components come from China. Similarly, 45 percent
of consumer durables, 70 percent of APIs and 40 percent of
leather goods imported are from China.
Import substitution aka “Make in India”
For some of the sectors, the impending supply risk and
the policy shift towards self-reliance is likely to
translate into what is commonly referred to as “make
in India” or import substitution.
Even before current crises, various companies have
been working towards import substitution as a key
business case to succeed. In Chemicals, Amine players
(Balaji Amines & Alkyl Amines), rubber chemicals
(NOCIL), Carbon black (Himadri Speciality & Phillips
Carbon), Engineering plastics (Bhansali Engineering)
are the areas to look at as they remain beneficiary of
government’s steps to curtail import dependence.
Further, basic chemicals can gain traction because of the imperative
to minimize supply chain risk. Companies to look at are Deepak
Nitrite and GNFC as China factor has brought focus on key raw
materials such as Acetone, Phenol, Aniline, Acetic Acid and Nitric
Acid which are heavily imported.
In case of Pharma, import dependency for key starting materials/APIs
means companies such as Aarti Drugs, Granules India, JB Chemicals,
IOL Chemicals would also be worth tracking. Some of them are key
manufactures for drugs/APIs such as Paracetamol, Metronidazole and
Ibuprofen and are increasingly attempting backward integration.
In the consumer durable space, the trend of in-house manufacturing is
as well been evident for domestic players such as Havells and Voltas
which have recently set-up in-house manufacturing facilities to
reduce import dependencies.
In the Auto equipment segment, Lumax Industries is setting up of an
electronics facility for localising component manufacturing. Further,
Maruti is focused towards manufacturing various imported
electronics parts, locally after witnessing recent supply disruptions.
Conclusion
The economic crisis triggered by Covid-19 pandemic
is much like the 1991 economic crisis, which was a
harbinger of a paradigm shift via liberalisation,
privatisation and globalisation. The post-Covid-19 era
may usher in unprecedented opportunities provided the
implementation deficit is adequately addressed.
