Q. What do you mean by Atmanirbhar Bharat? Discuss the significance and key challenges faced by country for achieving self-reliance and self-efficiency. Suggest suitable strategy to ensure Atmanirbhar Bharat.
Ans:
Last year, while announcing the Rs.20 lakh crore stimulus package and accompanied structural reforms, India gave call for moving in direction of being ‘Atmanirbhar Bharat’. Atmanirbhar Bharat essentially means being self-reliant India. The PM said, ‘the state of the world today teaches us that (AtmaNirbhar Bharat) “Self-reliant India” is the only path. It is said in our scriptures — EshahPanthah. That is — self-sufficient India’.
However, India’s self-reliance does not advocate self-centric arrangements. It is ingrained in the happiness, cooperation and peace of the world. It also doesn’t imply cutting down on all its imports and isolate itself. In contrast, self-reliance typically means that the country wants to have enough resources to pay for what it wants to import. This is not a rejection of globalisation, but a call for a new form of globalisation — from profit-driven to people-centric which takes into account the needs of labors, vulnerable and have nots.
Following elements are essential to the proposed concept of Atmanirbhar Bharat:
- Active participation in post-COVID-19 global supply chains: Self-sufficiency in the present context refers to improving efficiency, competing with the world and simultaneously helping the world.
- Resilience: This resilience refers to leveraging internal strengths, personal responsibility, and a sense of national mission (or “Man Making” as termed by Swami Vivekananda). Developing this resilience may require additional protection for domestic enterprises.
- For example, the move to disallow global tenders up to Rs. 200 crores for foreign players aims to increase the system’s resilience by protecting the MSMEs.
- Decentralized Localism: It is about creating a system that takes pride in local brands, encourages local capacity-building and indigenisation.
- For example, the scrapping of the ECA-APMC system enables localised decision-making by farmers even as they can participate in a national common market.
- System of Social Trust: A system where economic entities are expected to be self-reliant, requires a generalised system of social trust and the ability to enforce contracts, which in turn requires reformation of the legal system.
The significance:
- Recent pandemic has offered India a valuable lesson on the importance of self-reliance and self-sufficiency, and the country, each state within it, each district within every state, and each village within every district must aspire to attain the twin goals.
- The definition of self-reliance has undergone a change in the globalized world and clarified that when the country talks about self-reliance, it is different from being self-centered.
- Faster Economic Recovery: India’s ability to recover from the effects of COVID-19 and its economic fallout depends on the resilience of domestic industries.
- In this light, the mission aims to promote Indian industries while making them competitive through reforms and government interventions.
- Supply Chain Fragility: Countries all over the world are now looking at boosting domestic capabilities to be able to absorb future supply chain shocks.
- Self-reliance will prepare the country for tough competition in the global supply chain, and it is important that the country wins this competition. It will not only increase efficiency in various sectors but also ensure quality.
- The importance of local manufacturing, local market and local supply chains was realized during pandemic time. All our demands during the crisis were met ‘locally’. Now, it’s time to be vocal about the local products and help these local products become global.
- The international economic order is changing; the possibility of greater economic cooperation is diminishing. So the emphasis should be on the need to leverage India’s inner potential.
- India has entered in the period of demographic dividend and thus working age population has increased which needs to be employed at home. This helps in capitalizing the Demographic dividend of India.
- With India (1.37bn) set to surpass China (1.43bn) in becoming country with largest population by 2027, it also provides for increasing domestic demand which can be catered with locally produced goods.
- Emergence of developmental gaps: Continuous dependence on external sector for a long time creates developmental gaps in an economy. For example, technological dependence on imports has negatively affected the level of indigenous innovation and R&D.
- Health and Economic Security: The fallout of COVID-19 has showcased how dependency of any form such as raw material, labour etc. can precipitate into a security crisis.
- For example, absence of adequate Personal Protective Equipment (PPE) production capacity had created a crises situation for India during the initial period of the crises.
- Geopolitical considerations: High dependence on other countries for resources affects the geopolitical standing of the country in that region. For example, high import dependency of India on China for Active Pharmaceutical Ingredients (APIs).
The challenges:
- The supply chain disruption due to national and localised lockdowns has led to supply side and demand side contraction.
- Even, the consumption demand of the rest of the demography from agriculture, small-scale manufacturing and self-employed is stagnant due to low income growth.
- Even the recent packages has been criticised by the expoerts:
- The packages doesn’t seem to be raising its total expenditure by much. Overall rise in Government expenditure due to the package is close to 1% of the GDP.
- Issues Related to Liquidity: The government packages comprises both fiscal and monetary measures, the latter being in the nature of credit guarantees and liquidity infusions into banks and other financial sector institutions rather than the economy per se.
- Majority of the 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.
- According to previous Economic Survey, only 2 % of India’s workforce is skilled which is much lower when compared to the developing nations.
- Complex labour law system have created a lot of redundancy and loopholes in the legal system which paves the way to exploitation of labour. It can create industrial discontent, even a kind of labour unrest, which will stifle any hope of achieving industrial progress.
- Extreme inequality– Oxfam report has highlighted that the top 10% of the Indian population holds 77% of the total national wealth. 73% of the wealth generated in 2017 went to the richest 1%.
- More equality => more people having affordability to consume products => more domestic demand.
- 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.
- Lack of infrastructure: It is estimated that lack of adequate infrastructure reduces India’s GDP growth by 1-2 per cent every year.
- According to 2019-20 economic survey, to prevent ‘lack of infrastructure’ becoming a ‘binding constraint’ on the growth of Indian economy and to achieve the GDP of USD 5 trillion by 2024-25, India needs to spend about USD 1.4 trillion on infrastructure.
- 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.
- Low investment of R&D: India’s expenditure on R&D continues to be as low as 0.6% – 0.7% of the GDP, much lower than countries like South Korea at 4.3%, Israel at 4.2% and Japan at 3.4%. It has been stagnant at 0.6%-0.7% for the last two decades.
- Other socio-economic issues: e.g. low rates of female labour force participation of women, deep rooted caste system, lack of entrepreneurship, brain rain, unemployment, poor education etc.
Suitable strategy to ensure Atmanirbhar Bharat:
- The idea of Atmanirbhar Bharat if based on 5 pillars:
- First Pillar is Economy, emphasizing on Quantum Jump rather than Incremental change.
- Second Pillar is Infrastructure.
- Third Pillar is technology driven System,
- Fourth Pillar is Our Demography.
- Fifth pillar is Our Demand.
- P.M. has also highlighted the importance of preferring local products. In the light of this, citizens are urged to be vocal about their local products and help these local products become global.
- Structural reforms e.g. supply chain reforms for agriculture, rational tax system, simple and clear laws, capable human resource and a strong financial system are needed to negate the impact of crisis such as COVID and to make the country self-reliant.
- Incentivising the farming community: Need to shift from grain-based farming to cash crops, horticulture and livestock products. For example, the Chinese experience in the late 1970s has shown that reforms in agriculture increased rural income, leading to demand for labor-intensive industrial goods.
- Exploiting the demographic dividend: India has around 900 million people in the working-age population with an average age of 27.
- Shift the labour force from agriculture to manufacturing: For this, labour-intensive manufacturing should be promoted that can generate employment opportunities for labour force with low or little skills, along with income and demand.
- Completing projects under national infrastructure pipeline within stipulated time.
- Create a competitive manufacturing sector: Need to aggressively reduce both tariffs and non-tariff barriers on imports of inputs and intermediate products that will create a competitive manufacturing sector for Make in India, and “Assembly in India”.
- Ensure free flow of Investments: Attracting multinational enterprises and foreign investors in labour-intensive manufacturing will facilitate R&D, branding, exports, etc.
- Market reforms: By rationalizing punitive land acquisition clauses and rationalizing labour laws, both at the Centre and state level.
- Human capital development: Need for large-scale vocational training from the secondary-school level, like China and other east and south-east Asian countries.
The slowing down economy as well as weaker forces of globalization demands a new path for the New India. Atmanirbhar mission is a bridge for transforming into NEW INDIA which need several large scale and long-term measures like making subsidies performance dependent and strengthening public regulation etc. More importantly, increased investment in Education and Skill development is imperative to complement the structural reforms announced in the package. ©crackingcivilservices.com
