AATMA NIRBHAR BHARAT ABHIYAAN

WHY IN NEWS:

• Government announced a special economic package of Rs 20 lakh crore (equivalent to 10% of India’s GDP) with the aim of making the country independent against the tough competition in the global supply chain and to help in empowering the poor, labourers, migrants who have been adversely affected by COVID.

KEY MEASURES TAKEN:

• GOVERNMENT REFORMS:
  • Increase in borrowing limits:
    • The borrowing limits of state governments will be increased from 3% to 5% of Gross State Domestic Product (GSDP) for the year 2020-21.
    • There will be unconditional increase of up to 3.5% of GSDP followed by 0.25% increase linked to reforms on -  universalization of ‘One Nation One Ration card’, Ease of Doing Business, power distribution and Urban Local Body revenues.
    • Further, there will be an increase of 0.5% if three out of four reforms are achieved.

• • Privatisation of Public Sector Enterprise (PSEs):
    • A new PSE policy has been announced with plans to privatise PSEs, except the ones functioning in certain strategic sectors.

• MEASURES FOR BUSINESSES:
  • Collateral free loans for businesses:
    • All businesses (including MSMEs) will be provided with collateral free automatic loans
    • MSMEs can borrow up to 20% of their entire outstanding credit from banks and NBFCs.
    • Interest on the loan will be capped and 100% credit guarantee on principal and interest will be given to banks and NBFCs.

• • Corpus for MSMEs:
    • A fund of funds with a corpus of Rs 10,000 crore will be set up for MSMEs.  This will provide equity funding for MSMEs with growth potential and viability.
  • Subordinate debt for MSMEs:
    • This scheme aims to support to stressed MSMEs which have Non-Performing Assets (NPAs).
    • Under the scheme, promoters of MSMEs will be given debt from banks, which will be infused into the MSMEs as equity.
  • Schemes for NBFCs:
    • A Special Liquidity Scheme was announced under which Rs 30,000 crore of investment will be made by the government in both primary and secondary market transactions in investment grade debt paper of  NBFCs/Housing Finance Companies (HFCs)/Micro Finance Institutions (MFIs).
    • The central government will provide 100% guarantee for these securities.
    • The existing Partial Credit Guarantee Scheme (PCGS) will be extended to partially safeguard NBFCs against their borrowings
  • Employee Provident Fund (EPF):
    • Under the PM Garib Kalyan Yojana, the government paid 12% of employer and 12% of employee contribution into the EPF accounts of eligible establishments for 6 months
  • Statutory PF contribution:
    • Statutory PF contribution of both the employer and employee will be reduced from 12% to 10% each for all establishments covered by EPFO for three months. 
  • Street vendors:
    • A special scheme to facilitate easy access to credit for street vendors.
    • Under this scheme, bank credit will be provided to each vendor for an initial working capital
  • Expediting payment of dues to MSMEs:
    • Payments due to MSMEs from the government and CPSEs will be released within 45 days.
  • Insolvency resolution:
    • A special insolvency resolution framework for MSMEs under the Insolvency and Bankruptcy Code, 2016
  • Disallowing global tenders:
    • To protect Indian MSMEs from competition from foreign companies, global tenders of up to Rs 200 crore will not be allowed in government procurement tenders.
  • Reduction in TDS and TCS rates:
    • The rates of Tax Deduction at Source (TDS) for the non-salaried specified payments made to residents and Tax Collected at Source (TCS) will be reduced
  • Ease of doing business for corporates:
    • Direct listing of securities by Indian public companies in permissible foreign jurisdictions will be allowed.
    • Private companies which list Non-Convertible Debentures (NCDs) on stock exchanges will not be considered listed companies.
    • Databank of Independent Directors launched
  • Definition of MSME:
    • The definition of MSMEs will be changed by amending the Micro, Small and Medium Enterprises Development Act, 2006.
    • As per the new definition, the investment limit will be increased for micro, small and medium enterprises.
    • The current distinction between manufacturing and services MSMEs (to provide different investment limits for each category) will be removed. 
  • Initiation of insolvency proceedings:
    • The Insolvency and Bankruptcy Code, 2016 will be amended to provide for the following:
      • (i) Minimum threshold to initiate insolvency proceedings will be increased from one lakh rupees to one crore rupees
      • (ii) Suspension of fresh initiation of insolvency proceedings up to one year, depending upon the pandemic situation
      • (iii) COVID-19 related debt will be excluded from the definition of ‘default’
  • Amendments to Companies Act, 2013:
    • Certain offences under the Companies Act, 2013 will be decriminalised.  These include minor technical and procedural defaults such as shortcomings in CSR reporting, inadequacies in Board report etc.
    • This amendments will de-clog the criminal courts and NCLT
    • The National Company Law Appellate Tribunal (NCLAT) will be granted powers to create additional/specialised benches.

• AGRICULTURE AND ALLIED SECTORS:
  • Concessional Credit Boost to farmers:
    • Farmers will be provided institutional credit facilities at concessional rates through Kisan Credit Cards.
• • Agriculture Infrastructure Fund:
    • A fund of one lakh crore rupees will be created for development of agriculture infrastructure projects at farm-gate and aggregation points (such as cooperative societies and Farmer Producer Organizations).
  • Emergency working capital for farmers:
    • An additional fund of Rs 30,000 crore will be released as emergency working capital for farmers.
    • This fund will be disbursed through NABARD to Rural Cooperative Banks (RCBs) and Regional Rural Banks (RRBs) for meeting their crop loans requirements. 
  • Support to fishermen:
    • The Pradhan Mantri Matsya Sampada Yojana (PMMSY) will be launched for integrated, sustainable, and inclusive development of marine and inland fisheries.
  • Animal Husbandry infrastructure development:
    • An Animal Husbandry Infrastructure Development Fund will be set up, with the aim of supporting private investment in dairy processing, value addition, and cattle feed infrastructure.
    • Incentives will be given for establishing plants for export of niche dairy products.
  • Employment push using CAMPA funds:
    • CAMPA funds are currently used for protection of forest and wildlife management.
    • But, government will approve plans under the CAMPA to facilitate job creation for tribals/adivasis.
    • Funds under CAMPA will be used for plantation works, assisted natural regeneration etc apart from protection of forest and wildlife management.
  • Amendments to the Essential Commodities Act:
    • The Act will be amended to deregulate food items including cereals, edible oils, oilseeds, pulses, onions and potato.
    • This is expected to allow better price realisation for farmers by attracting investments and enabling competition in the sector.
    • Stock limit will be imposed only under very exceptional circumstances such as national calamities and famines with surge in prices.  Further, no such stock limit will apply to processors or value chain participant, subject to their installed capacity, or to any exporter subject to the export demand.
  • The Farmers’ Produce Trade and Commerce (Promotion & Facilitation) Ordinance 2020:
    • It aims to provide: (i) adequate choices to farmers to sell their produce at remunerative prices, (ii) barrier free inter-state trade, and (iii) a framework for e-trading of agriculture produce.
    • Currently, farmers are bound to sell their produce only to the licensees in Agricultural Produce Market Committees (APMCs).
    • The proposed amendments seek to enable free flow of agricultural produce and establish a smooth supply chain providing options of better price realisation to farmers.
  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance 2020:
    • It will provide for a national framework on farming agreements that protects and empowers farmers to engage with agri- business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price framework
    • Risk mitigation for farmers, assured returns, and quality standardisation will form an integral part of the framework.
    • This is aimed at enabling farmers to predict the price of crops at the time of sowing and will also increase private sector investment in the sector.

• MIGRANT WORKERS
  • One Nation One Card:
    • The scheme will introduce the inter-state portability of access to ration for migrant labourers.
    • All states/union territories are required to complete full automation of fair price shops by March 2021 for achieving 100% national portability.
  • Free food grain Supply to migrants:
    • Migrant workers who are not beneficiaries under the National Food Security Act ration card or state card will be provided grains and chana.
  • Affordable Rental Housing Complexes (ARHC) for Migrant Workers / Urban Poor:
    • The migrant labour/urban poor will be provided living facilities at affordable rent under Pradhan Mantri Awas Yojana (PMAY)
    • This will be achieved by:
      • (i) Converting government funded housing in the cities into ARHCs through PPPs
      • (ii) Incentivising manufacturing units, industries, institutions to develop ARHCs on their private land and operate them.

• CIVIL AVIATION
  • Efficient airspace management:
    • Restrictions on utilisation of the Indian Air Space will be eased so that civilian flying becomes more efficient.
    • This is estimated to allow optimal utilisation of airspace, reduction in fuel use, and time.
  • Public Private Partnership (PPP) model for airports:
    • World-class airports will be built through PPP model.
    • In the first round, the Airport Authority of India (AAI) has awarded three airports (Ahmedabad, Lucknow and Mangaluru)

• DEFENCE
  • FDI in defence manufacturing
    • FDI limit in defence manufacturing under automatic route will be increased from 49% to 74%
  • Make in India initiative will be promoted in the defence sector:
    • A list of weapons/platforms will be released which will be banned for import based on a year wise timeline.
  • Corporatisation of Ordnance Factory Board:
    • Government has planned to improve the autonomy, accountability and efficiency in Ordnance Supplies by corporatisation of Ordnance Factory Board.

• ENERGY
  • Liquidity support for distribution companies (DISCOMS):
    • A liquidity support of Rs 90,000 crore will be provided to power discoms.
    • These will be in the form of funds from Power Finance Corporation and Rural Electrification Corporation.
    • Discoms will also be provided with state government guaranteed loans exclusively for discharging their liabilities to power generation companies.
  • Coal evacuation:
    • Rs 50,000 crore will be spent on infrastructure development for evacuation of coal.
    • This includes investment in mechanised transfer of coal (conveyor belts) from mines to railway sidings.
  • Regulatory assets:
    • Regulatory assets in the power sector will be eliminated.
    • Regulatory asset is the fund which belongs to DSICOM due to approved tariff hike.  This is not realised in revenue as it not passed on to the consumers to avoid instability among them.
  • Privatisation of power distribution:
    • Power departments/utilities in union territories will be privatised.
  • Commercial coal mining:
    • Mineral Laws (Amendment) Act was passed, which opened up the coal sector for commercial mining.
    • Auctions will be conducted for allocation of coal mines.
    • Any party can bid for a coal block and sell in the open market. Entry norms will be liberalised.
  • Reduction in cross-subsidy:
    • The Electricity Act, 2003 will be amended to ensure a progressive reduction in cross-subsidies in the sector
    • Direct Benefit Transfer (DBT) is being planned for providing subsidy to eligible consumers.

• HOUSING
  • Credit Linked Subsidy Scheme for Middle Income Group (MIG)
    • This scheme will be extended by one year up to March 2021.
  • Support to real estate sector:
    • COVID 19 will be treated as an event of “Force Majeure” under Real Estate Regulatory Authority (RERA) by states/union territories and their Regulatory Authorities.
    • An extension date will be given on registration and completion dates of all registered projects

• SOCIAL SECTOR
  • Public health:
    • The investment in public health will be increased
    • The lab networks are being strengthened in districts and block levels for efficient management of the pandemic.
    • The National Digital Health Blueprint will be implemented, which aims at creating an ecosystem to support universal health coverage in an efficient, inclusive, safe and timely manner using digital technology.
    • Insurance cover of Rs 50 lakhs per person for health professionals under Pradhan Mantri GaribKalyan Yojana
    • Leveraging IT:
      • Roll out of e-Sanjeevani Tele-ConsultationServices
      • Arogya Setu - self assessment and contact tracing
    • Protection to Health Workers:
      • Amendment in Epidemic Diseases Act
      • Adequate provision for PPEs
  • Allocation for MGNREGS:
    • To help boost rural economy, an additional Rs 40,000 crore will be allocated under MGNREGS.
    • Wages of MGNREGA increased
  • Viability Gap Funding:
    • Viability Gap Funding (VGF) for social infrastructure projects will be increased by up to 30% of the total project cost.
  • Technology driven education:
    • PM eVidya will be launched for multi-mode access to digital/online education.
    • SWAYAM PRABHA DTH channels to support and reach those who do not have access to the internet
    • This program will include facilities to support school education in states/UTs under the DIKSHA scheme (one nation, one digital platform).
    • National Foundational Literacy and Numeracy Mission will be launched by December 2020 to ensure that every child attains learning level and outcomes in grade 5 by 2025

• MEASURES TAKEN BY RBI
  • RBI raised the Ways and Means advance limits of States by 60% and enhanced the Overdraft duration limits
  • Cash Reserve Ratio (CRR) was reduced
  • Banks’ limits for borrowing under the marginal standing facility (MSF) were increased.
  • Targeted Long Term Repo Operations (TLTRO) has been planned for investment in investment grade bonds, commercial paper, non-convertible debentures including those of NBFCs and MFIs.
  • Special Liquidity Facility (SLF) of Rs 50,000 crore for mutual funds to provide liquidity support.
  • Special refinance facilities were announced for NABARD, SIDBI and NHB at policy repo rate.
  • A moratorium of three months has been provided on payment of installments and interest on working capital facilities for all types of loans.

CHALLENGES

• Issues related to transmission:
  • 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.

• Skewed focus on supply side:
  • 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.

• Fiscal Deficit:
  • Total economic package under Aatma Nirbhar Bharat Abhiyaan is around 10% of India’s GDP.
  • This would increase government’s 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.

• Issues with proper estimation:
  • Most calculations suggest that far from the promised 10% of GDP, the actual government expenditure in the Atmanirbhar package is just 1%.

WAY FORWARD

• Increase demand:
  • The best way for this is to spend on green-field 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.

• Utilizing FER:
  • 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.

PRACTICE QUESTION:

Q. What are the salient features of ‘Atma Nirbhar Bharat Abhiyaan’? Critically analyse the need of achieving self-sufficiency in Indian manufacturing sector?