Decoding Of Atma Nirbhar Package.

1. Y UNIVERSITY MUMBAI
ABHISHEK BHADORIYA
AMITY UNIVERSITY MUMBAI

2. INTRODUCTION
Prime Minister of India Narendra Modi addressed his
countrymen and announced an Economic Package of
Rs 20 Lakh crore, giving stress on land, labour,
liquidity and law. PM stressed on the local products
and urged his countrymen to be “Vocal About Local”.
Prime Minister also mentioned 5-Pillars to make India self-
reliant. These 5 pillars are:-
Economy: An economy that brings quantum jump along with
incremental change.
System: A system which will be based on
technology.
Demand: To improve demand and supply chain India to
enhance the Indian economy.
Infrastructure: An infrastructure that becomes
the symbol of modern India.
Demography: A vibrant demography which would be the strength as
well as the source of energy for self reliant India.

3. AATMANIRBHAR BHARAT
Prime Minister Narendra Modi
on May 12 announced a stimulus
package totalling Rs 20 lakh
crore to rescue the economy
reeling
under the impact of coronavirus.
This amounts to nearly 10
percent of India's GDP.
The Rs 20 lakh crore stimulus
includes packages worth nearly
Rs 7-8 lakh crore already
announced by the Finance
Ministry and the Reserve Bank
of India (RBI). Finance Minister
Nirmala Sitharaman had
announced a Rs 1.7 lakh crore
package while RBI
Governor Shaktikanta Das had
announced liquidity support in
two tranches in March and April
amounting to over Rs 5 lakh
crore.
Announcing an economic
package of Rs 20 lakh crore,
which is almost 10 percent of
India's GDP, to help India
become a self-reliant nation,"
PM Modi said in his fifth address
to the nation since the
coronavirus outbreak.
This package, he said, will focus on areas
like land, labor , liquidity and law. While
PM Modi said the details of the package
will be shared in due course he said it is
time for us to do our bit for the street
hawkers, daily wage workers, migrant
laborers, fisherman, etc. and the stimulus
package has special provisions for them.

4. KKK
• The crisis has made the nation realize the Importance of
these people in the local supply chain. Time has taught us
that we have to realize the importance of local traders,
Crafts men, Stalls, Hawker etc.
• He noted that only when the people of a country realize
and promote local products will they get accepted as
global brands. The government was earlier considering a
measured approach to deal with the situation despite
mounting pressure from industries.

5. Why shouldn’t RBI’s package be included in the overall
package?
• That’s because direct expenditure by a
government either by way of wage subsidy or
direct benefit transfer or payment of salaries or
payment for construction of a new hospital etc
immediately and necessarily stimulates the
economy. In other words, that money
necessarily reaches the people either as
someone’s salary or someone’s purchase.
• But credit easing by the RBI — that is, making
more money available to the banks so that they
can lend to the broader economy is not like
government expenditure. That’s because,
especially in times of crisis, banks may take that
money from RBI and elsewhere and, instead of
lending it, park it back with the RBI.
• This is exactly what is happening right now. At
the last count, Indian banks had parked Rs 8.5
lakh crore with the central bank. So in terms of
calculations, RBI has given a stimulus of Rs 6
lakh crore. But the reality is that it has received
an even bigger amount back from the banks.

6. F
NEW PACKAGE OF COVID-19
Not entirely. While the PM did
not give the details, he did
specify that this calculation of Rs
20 lakh crore includes what the
government has already
announced and the steps taken
by the Reserve Bank of India
(RBI).
• This means the total amount of
additional money — that is over
and above what the government
would have spent even in the
absence of a Covid crisis —will
not be Rs 20 lakh crore. It would
be substantially less.
ACTUAL AMOUNT SPENT BY THE
GOVERNMENT OF 20 LAKH CRORE?
A rough estimate suggests that the
RBI’s decisions have provided
additional liquidity of Rs 5-6 lakh crore
since the start of the Covid-19 crisis.
Add this to the Fiscal policy of Rs 1.7
lakh crore of first fiscal relief package
announced by the Centre on March 26.
Together, the two already account for
40 per cent of the Rs 20-lakh crore
package. That leaves an effective
amount of Rs 12 lakh crore. However,
if the government is including RBI’s
liquidity decisions in the calculation,
then the actual fresh spending by the
government could be considerably
lower than Rs 12 lakh crore.
Because RBI has been coming out with long term
bond buying operations (long term repo
operation or LTRO, to infuse liquidity into the
banking system) worth Rs 1 lakh crore at a time.
If, for argument’s sake, RBI comes out with
another LTRO of Rs 1 lakh crore, then the overall
fiscal help falls by the same amount.

7. • The "Atma Nirbhar Bharat
Abhiyan" initiative to spur
growth and help in building self-
reliant India
• Plan based on five important
pillars: economy, infrastructure,
tech-driven systems,
demography and demand
• Prime Minister has laid out a
comprehensive vision, which is
based on wide and deep
consultations with several
sections of society
• Government to announce 15
different measures
o 2 for employees
o 2 for NBFCs and MFC
o 6 for MSES
• Focus to be on factors of
production - land, labour,
liquidity and law
• Local brands to be brought to
global level
• Focus will be on nurturing local
brands as part of this mission
• Global value chain integration
part of PM's plan
•
FM Nirmala Sitharaman's announced about the government
AtmaNirbhar Bharat package:-
• We have capability to build such
enterprises All schemes rolled out
by government since it came to
power are driven by reforms.
• Direct Benefit Transfer (DBT)
scheme helped government deliver
money directly to Jan Dhan accounts
of the poor
• Rs 52,606 crore transferred to 41 crore
Jan Dhan account holders under PM
Garib Kalyan scheme
• Refunds of ₹ 18,000 crore made to
income tax assesses, 40 lakh taxpayers
benefitted

8. • R Finance Minister announces collateral-free loans worth ₹ 3 lakh crore for MSMEs
with turnover up to ₹ 100 crore till October 31, 2020
• Move likely to benefit 45 lakh units so they can resume their businesses
• 4-year collateral-free loans to be 100% credit-free, with a moratorium for first 12
months
• Definition of MSMEs being changed Company with investment of ₹ 1 crore, turnover
of ₹ 5 crore is a micro enterprise under new definition; one with ₹ 10 crore
investment, turnover of ₹ 50 crore a small enterprise; one with ₹ 20 crore investment,
₹ 100 crore turnover a medium enterprise
• No global tender for government procurement up to ₹ 200 crore
• EPF support of ₹ 2,500 crore extended for another three months: June, July and
August (government to pay employee, employer contribution to EPF accounts)
• Support towards months March, April, May already announced earlier as part of PM
Garib Kalyan scheme; that scheme being extended for another three months (June-
August)
• 3,67,000 organizations to
benefit
• Announces ₹ 30,000 crore
liquidity push for non-banking
financial companies (NBFC),
housing Finance companies
(HFC), microfinance
institutions (MFI)
• Rs 90,000 crore liquidity for
power distribution companies
• Six-month extension for
government contractors;
builders get more time to
finish projects
• Income tax return assessment
due date for financial year
2019-20 extended from July
31 and October 31 to
November 30; tax audit date
from September 30 to
October 31

10. IMPACT OF COVID RELIEF PACKAGE
India's Rs 20 lakh crore COVID relief package one among the largest
in the world. PM Modi includes previously announced measures to
save the lockdown-battered economy, and focuses on tax breaks for
small businesses as well as incentives for domestic manufacturing.
RS 20 lakh crore package includes Rs 1.7 lakh crore package of
free food grains to poor and cash to poor women and elderly,
announced in March, as well as the Reserve Bank's liquidity
measures and interest rate cuts.
COVID-19 pandemic package, taken together with earlier
announcements by the government during COVID crisis and decisions
taken by RBI, is to the tune of RS 20 lakh crore, which is equivalent to
almost 10 per cent of India's GDP
Investments in infrastructure are may also form part of the package.
Easy access to land as well as labor reforms may also form part of the
package to lure companies leaving China. The package is seen as a
government attempt to check the world's fifth-largest economy
hurtling towards its first full-year contraction in four decades.
According to estimates, lockdown may have led to 12.2 crore people
losing jobs in April and consumer demand evaporating.

11. Rs 1.70 lakh crore Pradhan Mantri Garib Kalyan Package (PMGKP), the
government announced free wheat or rice plus pulses to poor as well
as a cash payment to women and poor senior citizens and farmers over
a period of three months till June.
Under the Pradhan Mantri Garib Kalyan Ann Yojana 67.65 lakh MT of
food grains have been lifted by 36 states/UTs for April 2020. Around 16
LMT of food grains have been distributed, covering 60.33 crore.
beneficiaries by 36 states/UTs for April 2020.
About 6 LMT of food grains have been distributed, covering 12.39 crore
beneficiaries by 22 states/UTs for May 2020. 2.42 LMT of pulses have
also been dispatched to various states/UTs.
Pulses have been distributed so far to 5.21 crore household
beneficiaries out of 19.4 crore such beneficiaries.
According to the latest government data, RS 34,800 crore financial
assistance using digital payment infrastructure were provided to about
39 crore beneficiaries .

12. Most economic activity in the country had come to a standstill after the
government imposed a 21-day nationwide lockdown beginning March
25 to check the spread of Covid-19. The lockdown has since been
extended twice through May 17, with some relaxations to allow the
resumption of economic activity. The package, he said, will focus on
land, labor, liquidity and laws. It will cater to various sections, including
cottage industry, MSMEs, laborers, middle class, and industries.
The combined package works out to roughly 10 per cent of the
India GDPs

13. VISION AND PURPOSE
Apart form the RBI’s stimulus, some part will
probably be guaranteeing bank loans to producers
– but a good way to judge its size is to juxtapose
this with the expected collapse in the economy.
The most pessimistic estimate is a 5% real
contraction in growth; Modi’s package, then, seeks
to overcome that and ensure there is a small
positive growth in the year. As expert after expert
has said, it is critical that the economy doesn’t
stall/contract as reviving businesses – and
livelihoods – after they have shut is very difficult.
Intended Usage and Actual result of 20 Lakh
crore COVID Package.
The Finance Minister said the government
will offer bank loans amounting to ₹ 3 lakh
crore to small businesses as part of measures
to combat the damage caused by the
coronavirus (COVID-19) pandemic.
In a media briefing of around 90 minutes, the Finance Minister also announced a credit
guarantee to businesses to avail collateral-free loans from banks, aiming to help 45 lakh
businesses by October 2020.
The first instalment of the series of presentations by the Finance Minister comes at a time
when the country remains in a nationwide lockdown with few exceptions to curb the spread
of the coronavirus (COVID-19) pandemic.
The COVID-19-triggered lockdown has pushed an already-ailing economy into a standstill,
hampering businesses and landing thousands jobless

14. The last few days have seen a rush of labour – and some land – ‘reforms’
by various state governments but, in reality, they haven’t amounted to
much in the absence of comprehensive reform. In his address to the
nation, the prime minister has promised that since one of the pillars he
spoke of was labor. Apart from the emphasis on infrastructure that was
expected, he has promised sweeping supply chain reforms in agriculture
– once again, some states have announced piecemeal changes here over
the past few days – and also possible tax cuts for the middle classes who
have suffered salary cuts and job losses.
The single-biggest hope – not done well,
it can also be the biggest disappointment
– lies in Modi’s repeated emphasis on
‘local’. Building local brands, he said, was
critical and spoke of how, in response to
his call, the demand for KHADI had shot
up. All well-known global brands, he said,
began as local brands.
In a world where isolationism is the new mantra, thinking local means higher import
tariffs and other forms of protection; in other words, a high-cost economy. So, if India
is to develop global brands, Modi’s message has to be sweeping reforms to lower
costs in the country, whether by way of flexible labor laws, improved infrastructure,
a more welcoming environment. Indeed, if industry doesn’t become more
competitive, the loan guarantees that will be part of the package will become a dead
weight as firms won’t be able to repay them. If firms like Vodafone Idea shut down,
as they will without slashing government levies, ‘local’ can’t take off; having more
‘local’ oil or mineral production, similarly, requires slashing exorbitant government
levies and fast-tracking environmental approvals. Over the past several months,
Modi has had a series of detailed discussions to come up with sectorial solutions, one
of which was the recent package to attract global manufacturers of mobile phones to
the country; the budget sought to bring Indian taxes on a par with the global best.
This came after years of unfriendly policy towards industry, so it is best to see how
things really unfurl on the ground.

15. Also, even if the cash component of the package is Rs 5-8 lakh crore – with
RBI liquidity, loan guarantees, tax and license fee giveaways forming the
rest – it will send bond-holders into a tizzy and also make rating agencies
relook their India outlook; more so, since there will be a big shortfall in
both central and state tax collections this year. In other words, Modi’s
move is replete with risk.
The only way out is to convince investors/raters he has, in parallel, a
credible plan to slash wasteful subsidies – two thirds of Indians get a 90%
food subsidy – to privatize in a big way and to draw down debt. Including
LIC, the value of PSU shares with the government are around RS 15 lakh
crore; all of this can, for instance, be put into a big mutual fund-type
structure, and a systematic disinvestment plan can be put in place to sell,
say, Rs 10,000 crore of shares on the first of every month irrespective of
what the market price is, and that money be used to retire debt.

16. CONCLUSION
Job losses unaddressed
India’s great middle class, which is also suffering, has
found no solace either; nor is it likely that they will get
anything substantial from this package. A large number
of workers in the organized sector are facing heavy pay
cuts, job losses, a sharp fall in income, and uncertainty.
No stakeholders consulted
Ideally, after the first round of an insufficient package,
the government should have begun consultations with
parliamentarians, states and industry representatives
to prepare a well-thought-out relief package. States
which have been at the forefront of the war against
COVID-19 have not been given the required funds to
help them cope with the public health emergency.

17. Migrant workers ignored
The first national lockdown was announced in the most
dramatic manner late in the evening and without
adequate notice. Economic desperation might leave
poor workers with no choice but to return to work. But
many of them are truly worried about getting infected.
Healthcare needs more attention
Our healthcare delivery system in most States is
extremely fragile. One wonders, for instance, whether
Bihar can handle the consequences if the virus begins to
spread with the return of millions of migrant workers
back to the State. Many other States also face a similar
plight given the poor state of primary healthcare
facilities. The pandemic has exposed a hard truth: most
private healthcare providers seem to be incapable of
and unwilling to help even during a national crisis.
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