Atmanirbhar Bharat 3.0: A Path towards self-reliant India

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“Atmanirbhar” or in general sagacity “Self-sufficient” – is a simple concept. It is the creation of aboriginal products to cater to the needs of the local population. It is the creation of an environment where mutually the local manufacturers and the local customers are satisfied.

The government created this concept to support the local business by urging people to buy local products to revive the poor state of the economy.

Finance Minister Nirmala Sitharaman introduced a new scheme ‘Atmanirbhar Bharat Rozgar Yojana’ to incentivise the creation of new employment opportunities during the COVID-19 recovery phase.

One of the two things will happen:

  1. India will become self-reliant.
  2. Imports will drop and Exports will upsurge.

Now, for businesses to thrive expansion is imperative. There will be a point of inundation where building only for local people isn’t profitable any more. A nation may be sufficient in one may be deficient in another. That is why import and export of goods and services are significant to the country. The balance between them is therefore vital.

And that is where we come to the next step, Globalization. Itis the way any business expands to other nations. But as of now, the small steps taken to boost the economy are pretty much attainable.

But here is where the point number 2 carries great importance. The simple question is: When everything is being manufactured intramurally, what is the point of importing goods?

Here are crucial takeaways from Atmanirbhar Bharat Abhiyaan 3.0 economic stimulus package to counter the effects of Covid pandemic lockdown on the economy and people:

Atmanirbhar Bharat Rozgar Yojana: 

Ms Sitharaman announced the new Aatmanirbhar Bharat Rozgar Yojana which will incentivise the creation of new jobs during the Covid-19 economic retrieval phase. The new employees hired by the Employees’ Provident Fund Organisation (EPFO)-registered organisations will receive benefits during COVID-19.

That is, the organisations of up to 1000 employees would receive employee’s contribution (12% of wages) & employer’s contributions (12% of wages), totalling 24% of wages, for two years.

Employers with over 1,000 employees will get employees’ contribution of 12%, for two years.

So this way, if the EPFO registered establishments take in new employees or those who lost jobs earlier will get benefits from the government.

The scheme will be effective from 1st October 2020 and operational till 30th June 2021.

Emergency Credit Line Guarantee Scheme: 

A credit guarantee support scheme for the health care sector and 26 sectors stressed due to COVID-19 pandemic was launched, with credit outstanding of above Rs. 50 crore and up to Rs. 500 crore as on 29th February 2020 stressed due to Covid-19, among other criteria.

Entities will get supplementary credit up to 20% of unsettled credit with a tenor of five years, including a 1-year freeze on principal repayment.

This scheme will be available till 31st March 2021.

Production-Linked Incentive: 

The PLI scheme worth ₹ 1.46 lakh crore is being offered to 10 champion sectors which will help boost the efficiency and competitiveness of domestic manufacturing. A labour-intensive project.

Pradhan Mantri Awaaz Yojana Urban: 

An additional outlay of ₹ 18,000 crores over budget estimate towards PM Awaaz Yojana Urban has been announced which will help ground 12 lakh houses and complete 18 lakh houses. This will create additional 78 lakh jobs and improve the production and sale of cement and steel resulting in a multiplier effect on the economy.

Relaxation of Earnest Money Deposit (EMD): 

The performance security on government contracts in the construction/infrastructure sector will be reduced to 3% from around 5-10%, while Earnest Deposit Money (EMD) will not be required and will be replaced by the Bid Security Declaration. The relaxations will be applicable till December 31, 2021. Major relief to the construction sector.

Income Tax Relief for Developers and Home Buyers: 

The finance ministry announced tax relief for developers and home buyers for houses up to ₹ 2 crores. The differential between circle rate and agreement value in real estate income tax is being increased from 10% to 20% (Section 43 CA of IT Act) from November 12, 2020, till June 30, 2021, for primary sale of residential units up to ₹ 2 crore the income tax relief provides an incentive to the middle class to buy homes.

Infra Debt Financing

The government will make ₹ 6,000 crore equity investment in debt platform of National Investment and Infrastructure Fund (NIIF), which will help NIIF raise ₹ 1.1 lakh crore by 2025 for financing infrastructure projects.

Boost for Project Exports:

Rs. 3,000 Crore boost is being provided to EXIM Bank for promoting project exports under Indian Development and Economic Assistance Scheme (IDEAS Scheme).

R&D grant for Covid Vaccine:

Rs. 900 Crore is being provided to the Department of Biotechnology for Research and Development of Indian Covid Vaccine.

Capital and Industrial Incentive:

Rs. 10,200 Crore is being provided for capital and industrial expenditure on national defence equipment, industrial infrastructure and green energy.

Boost for Rural Employment:

An outlay of Rs. 10,000 Crore is being provided for PM Garib Kalyan Rozgar Yojana to provide rural employment. This will help fast-track the rural economy.

Government is trying at its best to spur the dwindling economy and people now are not spending too much because of the fear of them getting fired from jobs. The measures follow a multi-faceted approach, aimed at generating employment and encouraging workforce in urban areas, expanding the incentives offered to boost domestic manufacturing, and kickstarting the real estate cycle, among others.

The government’s announcements focus on job creation, easing credit flow, butactual spending remains limited.

The Real Deal

Execution. The government can simply be good with their schemes but it is nothing without proper execution. So there is an urgent need to execute the abovesaid package smoothly.

The Covid wave. Taking the second wave into consideration, the biggest challenge would be tackling the root cause together. We as a community need to follow COVID-19 guidelines in a healthy and cool manner.

The global value chain is distorted due to Covid, we won’t get much support from the rest of the world, so we need to strengthen our capabilities.

Challenge of making exports rise (our exports are stagnant from quite some time).

Job areas need to be augmented.

The need for infrastructure projects. It indirectly creates a job, helps in raising demand and important for better connectivity.

Is the Atmanirbhar Bharat 3.0 stimulus package enough to revive the economy?

The Atmanirbhar Bharat stimulus package has reached the 3rd level and it will most definitely go further. The release of the stimulus package in levels makes sense and seeks to sidestep the threat of surplus liquidity and resorting to measures for its amendment. The GDP of the nation in 2019 was nearly $2.94 trillion and that’s made over a year. So for a year practically in a nationwide lockdown and consequent psychological breakdown, government stimulus pack acts as a booster dose to our economy and it will work on reviving our country from this covid era. 

It’s almost like one of your car tyres is punctured and you do not have a spare tyre. You do not know how to repair the punctured tyre, you will try a variety of options.

The need at this time is to create a current in the economy where people would aspire to catch the current.

Patchwork efforts can work only if luck favours but right now, this seems like a plausible way to address the issues identified in each sector and I would say that it’s a more realistic approach.

Atmanirbhar Bharat 3.0 came at the right time, we just need to ensure its proper execution with wisely managing COVID situation.

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