While the global economic recovery has been hit by second waves of infections and more stringent lockdowns in several countries, India’s economy is ‘riding against the COVID-19 wave’ with persistent improvements in economic indicators showing a V-shaped recovery.
The new year has dawned with the approval of long-awaited COVID-19 vaccine and initiation of vaccination drives in various countries. This gives strength to the optimism on both health and economic fronts despite continuing surge in global cases and the potential challenge of a mutant strain.
“In the global economy, rise in lockdown stringency following second waves has slowed... recovery, as seen in tapering Purchasing Managers’ Index estimates, decline in port traffic activity, and stagnating commercial flight activity…,” the review noted, contrasting that trend with India’s recovery path.
“The effective management of the COVID-19 spread despite the festive season and onset of winter season, combined with sustained improvement in high-frequency indicators and V-shaped recovery, along with easing of lockdown restrictions distinguish Indian economy as one riding against the COVID-wave.
Stressing that the agriculture sector — which clocked 3.4% growth in the first two quarters of FY21 — remained the bright spot of the Indian economy, the review pointed to a 2.9% rise in rabi sowing this year, along with accelerating tractor sales suggesting rural distress had been successfully addressed by the PM Garib Kalyan Yojana (PMGKY).
“Rise in minimum support prices accompanied by record procurement, and accelerated wage employment generation through MGNREGS, bodes well for rural incomes and bears testimony to PMGKY’s success in alleviating rural distress... This rise in rural incomes is mirrored in the healthy, though moderated, sales in passenger vehicles, two- and three-wheelers and tractors, and a rebound in vehicle registrations for the first time after March 2020,” it said.
Mega vaccination drive: Asserting that the government was well-prepared to undertake a mega vaccination drive, following the emergency use approval for two vaccines in India, the Finance Ministry said a blueprint was ‘ready with priority for health workers among others, real-time Intelligence Network Co-WIN in place, upgradation of cold-chain infrastructure for last-mile delivery, and ongoing dry runs’.
About Atmanirbhar Bharat Abhiyan
Atmanirbhar Bharat Abhiyan (Self-reliant India Mission) is a campaign launched by the Central Government of India which included an Rs.20 lakh crore economic stimulus package and a number of reform proposals.
It is equivalent to almost 10% of India’s GDP.
The meaning of the term ‘Atmanirbhar Bharat’ is self-reliant India.
Significance of Atmanirbhar Bharat Abhiyan
Remaking that self-reliance is the only way out for India, the PM quoted from our scriptures “Eshah Panthah”, that is – self-sufficient India.
Self-reliance will make globalization human-centric.
The definition of self-reliance has changed in a globalized world and it is different from being self-centred. India’s fundamental thinking and tradition of “Vasudhaiva Kutumbakam” provides a ray of hope to the world.
This should be seen in the context of Human-Centric Globalization versus Economy Centralized Globalization.
Self-reliance does not mean cutting India off from the world. India believes in the welfare of the world and India’s progress is linked with the world. The world trusts that India has a lot to contribute to the development of the entire humanity.
The PM also stressed on the need to be vocal for local products and urged people to buy only local products.
Five Pillars of a Self-reliant India
Economy: contemplates not an Incremental change but a quantum leap so that we can convert the current adversity into an advantage.
Infrastructure: that can be an image of modern India or it can be the identity of India.
Systems: driven by 21st-century technology, and that is not based on old rules.
Democracy: a vibrant democracy that is the source of energy to make India self- reliant.
Demand: where the strength of our demand and supply chain is utilized intelligently.
The reforms and stimulus measures under Rs 20 lakh crore package were subsequently elaborated by the Finance Minister in five tranches:
The first tranche of Atmanirbhar Bharat Abhiyan – Total Rs 5,94,550 Cr
Collateral free loans and emergency credit to restart business including MSME – 3,00,000 Cr.
Subordinate debt for stressed MSMEs – 20,000 Cr
Fund of Funds for an equity infusion to MSMEs – 50,000 Cr. It will also encourage MSMEs to get listed on the main board of Stock Exchanges.
Extended EPF support via and government contributions to EPF accounts of eligible establishments – 2800 Cr
Reduced EPF rates of both employer and employee – 6750 Cr
Special Liquidity Scheme for NBFCs/HFCs/MFIs – 30,000 Cr
Partial credit guarantee scheme for liabilities of NBFCs/MFIs – 45,000 Cr
Liquidity injection for DISCOMs via Power Finance Corp/REC – 90,000 crore
Reduction of TCS / TDS rates – 50,000 Cr
The second tranche of Atmanirbhar Bharat Abhiyan – Total Rs 3,10,000 Cr
Free food grains to migrant workers for 2 months – 3500 Cr
Interest subvention of MUDRA-Shishu loans – 1500 Cr
Special credit facility to street vendors – 5000 Cr
Extension of credit linked subsidy scheme in the housing sector for the middle-income group – 70,000 Cr
Additional emergency working capital for farmers through NABARD – 30,000 Cr
Additional concessional credit through Kisan Credit Cards – 2,00,000 Cr
One Nation One Ration card to enable a migrant beneficiary to purchase grains from any ration shop in the country.
Affordable housing for migrants and urban poor via a scheme under PMAY and affordable rental housing complexes (ARHC) under PPP mode.
The third tranche of Atmanirbhar Bharat Abhiyan – Total Rs 1,50,000 Cr
Agri Infrastructure Fund for farm gate infrastructure including cold chain and post-harvest infrastructure – 1,00,000 Cr
Food micro-enterprises with a cluster-based approach– 10,000 Cr
Pradhan Mantri Matsya Sampada Yojana (PMMSY) – 11,000 Cr for activities in Marine, Inland fisheries and Aquaculture and 9000 Cr for Infrastructure – Fishing Harbours, Cold chain, Markets, etc.
Animal Husbandry Infrastructure Development Fund – 15,000 Cr
Promotion of Herbal Cultivation – 4000 Cr
Extending Operation Greens project from Tomatoes, Onion, and Potatoes (TOP) to all fruits and vegetables – 500 Cr
Beekeeping initiatives – 500 Cr
The fourth and fifth tranches of Atmanirbhar Bharat Abhiyan (combined) – Total Rs 48,100 Cr
Viability gap funding – 8,100 Cr
Additional MGNREGA allocation – 40,000 Cr
Earlier measures – Total Rs 1,92,800 Cr
Pradhan Mantri Garib Kalyan Package for the poor – 1,70,000 Cr:
Insurance cover of Rs 50 lakh per health worker
Free cereals and pulses, gas cylinders to poor families for 3 months
Direct cash transfer via Jan Dhan account to poor women.
PF credits to low-income workers and advances from EPF.
Collateral-free lending for Women SHG up to Rs 20 lakhs.
Revenue lost due to tax concessions – 7,800 Cr
PM’s announcement in the health sector – 15,000 Cr
Measures taken by the Reserve Bank of India – Total Rs 8,01,603 Cr
RBI enhanced liquidity by Rs 1.37 lakh crores by reducing CRR
Targeted long-term repo operations of Rs 1 lakh crore.
Raised the Ways and Means advance limits of the state governments by 60 percent.
Raised borrowing limits of banks under the marginal standing facility to avail additional Rs 1.37 lakh crore.
Special refinance facilities to NABARD, SIDBI, and NHB
Special liquidity facility for mutual funds
Moratorium on loan repayments
Other major decisions taken under Atmanirbhar Bharat Abhiyan
Apart from the above, under Atmanirbhar Bharat Abhiyan decisions are also made to reform labour, agriculture, coal sector etc.
Labour sector reforms
To avoid regional disparity in minimum wages, National Floor Wage to be introduced.
Appointment letter to be provided to all workers to promote formalization.
Occupational Safety & Health (OSH) code to cover all establishments engaged in hazardous work.
Definition of the inter-state migrant worker to include migrant workers employed directly by the employer.
ESIC coverage will be extended to all districts and all establishments employing 10 or more employees as against those in notified districts/areas only.
Mandatory ESIC coverage for employees in hazardous industries with less than 10 employees.
Introduction of re-skilling funds for retrenched employees.
Provision for Social Security Fund for unorganized workers.
Provision of gratuity on completion of one-year service as against 5 years.
Agriculture Marketing Reforms to provide choices to farmers
Now, farmers are bound to sell agriculture produce only to licensees in APMCs.
A law will be formulated to provide choices to farmers to sell produce at an attractive price and enable barrier-free inter-state trade.
The legal framework will be created towards contract farming and enable farmers to engage with processors, aggregators, large retailers, exporters in a fair and transparent manner.
Risk mitigation for farmers assured returns and quality standardization to be an integral part of the framework.
Coal sector reforms
Introduction of commercial mining in the coal sector through a revenue-sharing mechanism instead of the regime of fixed Rupee/tonne
To lower impact on the environment, coal gasification and liquefication will be incentivized through rebate in revenue share
Coal Bed Methane (CBM) extraction rights to be auctioned from Coal India Limited’s (CIL) coal mines.
Self-reliance in defence production
Ban the import of several weapons and a separate budget provisioning for domestic capital procurement to help reduce the huge defence import bill.
Corporatize the Ordnance Factory Board to improve autonomy, accountability, and efficiency.
Increased FDI limit in the defence manufacturing under the automatic route from 49 percent to 74 percent.
Aircraft and airspace sector
Restrictions on the utilization of the Indian airspace will be eased so that civilian flying becomes more efficient.
Development of world-class airports through PPP,
The tax regime for Aircraft Maintenance, Repair, and Overhaul ecosystem rationalized and the convergence between the defence sector and the civil MROs will be established to create economies of scale.
Boosting private participation in space activities. The private sector will be allowed to use ISRO facilities and other relevant assets to improve their capacities.
PM e-VIDYA — a program for multi-mode access to digital/online education — will be launched. The program will comprise one earmarked TV channel per class from 1 to 12. Special e-content will be prepared for visually and hearing impaired. Top 100 universities will be permitted to automatically start online courses by 30 May 2020.
Manodarpan, an initiative for psycho-social support of students, teachers, and families for mental health and emotional wellbeing, will also be launched simultaneously.
National Foundational Literacy and Numeracy Mission will be launched in December 2020 to ensure that every child attains learning levels and outcomes in grade 5 by 2025.
Ease of doing business related measures
The minimum threshold to initiate insolvency proceedings raised to Rs 1 crore
Suspension of fresh initiation of insolvency proceedings up to one year.
Special insolvency resolution framework for MSMEs to be notified soon.
Decriminalization of violations under Companies Act
Allow direct listing of securities by Indian public companies in permissible foreign jurisdictions.
The government will announce a new, coherent policy where all sectors are open to the private sector while public sector enterprises (PSEs) will play an important role in defined areas.
A list of strategic sectors requiring the presence of PSEs in the public interest will be notified.
In strategic sectors, at least one enterprise will remain in the public sector but the private sector will also be allowed.
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