Covid-19 pandemic has been deadly all over the globe and has made its mark on India too. In order to fight it head on, our Prime Minister made a huge announcement of Aatmanirbhar package Abhiyan (ABA) on 12 may 2020 of ₹20 Lakh Crore. This research study has been written by me where I decode the package in detail; discuss its usefulness and its impact on the nation.

1. ABHISHEK CHAVALI
FINANCIAL DERIVATIVES
AMITY BUSINESS SCHOOL

2. Covid-19 pandemic has been deadly all over the globe
and made its mark on India too.
India’s economy, which has grown every year for the past
40, was faltering even before the lockdown, and the
International Monetary Fund now predicts it will shrink by
4.5% this year.
Many of the hundreds of millions of people lifted out of
extreme poverty by decades of growth are now at risk in
more ways than one.

3. In order to fight it head on, our Prime Minister made a huge
announcement of Aatmanirbhar package Abhiyan (ABA) on 12 may
2020 of ₹20 Lakh Crore.
The focal point of the concept was to make the nation self-reliant with
more focus on local manufacturers and service providers.
This would also strengthen the economy, improve the standard of
living and most importantly improve the trade deficit and the exchequer
balance of the country.
PM Modi said, “21st century belongs to India and it is the time for us to
become self-reliant for which we have to focus on 5 pillars.”

4. 1ST TRANCHE
Size: ₹5.94 lakh crore
(2.97% of GDP)
SI No Measures ₹Crore
1 Emergency W/C Facility for Businesses, including
MSMEs
3,00,000
2 Subordinate Debt for Stressed MSMEs 20,000
3 Fund of Funds for MSME 50,000
4 EPF Support for Business & Workers 2,800
5 Reduction in EPF rates 6,750
6 Special liquidity Scheme for NBFC/HFC/MFIs 30,000
7 Partial credit guarantee Scheme 2.0 for Liabilities
of NBFCs/MFIs
45,000
8 Liquidity Injection for DISCOMs 90,000
9 Reduction in TDS/TCS rates 50,000
Sub Total 5,94,550

5. The 1st Tranche included:
• Collateral free automatic loans to MSMEs, 100% credit guarantee cover
to banks, NBFCs- ₹3 lakh crore.
• Subordinate debt to stressed MSMEs- ₹20,000 crore.
• Equity infusion for MSMEs- ₹50,000 crore.
• EPF support for 3 months and EPF contribution reduced for 3
months.
• Liquidity scheme for NBFCs/ HFCs/ MFIs- ₹30,000 crore.
• Liquidity injection by REC and PFC- ₹90,000 crore.

6. • Partial Credit Guarantee Scheme 2.0 for NBFCs, first 20% loss borne
by government- ₹45,000 crore.
• 25% reduction in TDS/TCS rate- ₹50,000 crore.
The first set of relief measures announced by Nirmala Sitharaman
focused on enabling the Indian economy’s backbone – MSMEs that
employ around 11 crore people and have a GDP share of approximately
29 per cent.The first tranche worth ₹5.94 Lakh Crore provided a credit
line especially to small businesses and support electricity distribution
companies and shadow banks.

7. 2ND TRANCHE
Size: ₹3.10 lakh crore
(1.55% of GDP)
SI No Measures ₹Crore
1 Emergency W/C Facility for Businesses, including
MSMEs
3,00,000
2 Subordinate Debt for Stressed MSMEs 20,000
3 Fund of Funds for MSME 50,000
4 EPF Support for Business & Workers 2,800
5 Reduction in EPF rates 6,750
6 Special liquidity Scheme for NBFC/HFC/MFIs 30,000
7 Partial credit guarantee Scheme 2.0 for Liabilities
of NBFCs/MFIs
45,000
8 Liquidity Injection for DISCOMs 90,000
9 Reduction in TDS/TCS rates 50,000
Sub Total 5,94,550
SI No Measures ₹Crore
1 Free Food grain Supply to Stranded Migrant
Workers for 2 months
3,500
2 Interest Subvention for MUDRA Shishu Loans 1,500
3 Special Credit Facility to Street Vendors 5,000
4 Housing CLSS-MIG 70,000
5 Additional Emergency Working Capital through
NABARD
30,000
6 Additional credit through KCC 2,00,000
Sub Total 3,10,000

8. The 2nd Tranche included:
• Free food grain supply to migrants for 2 months: ₹3,500 crore.
• Interest subvention of 2% for prompt-payees of Mudra-Shishu loans: ₹1,500
crore.
• Credit-linked subsidy scheme for middle income families: (₹6-18 lakh a year).
• Additional emergency working capital funding for farmers through Nabard:
₹30,000 crore.
• Concessional credit to 2.5 crore farmers through Kisan Credit Cards: ₹2 lakh
crore.

9. • Totalling ₹3.1 lakh crore, the second tranche of the economic relief
package included free food grains to the migrant workers across the
country.
• The relief package is for those workers who have been amongst the
worst-affected sections of the population from the economic
disruption and disturbance caused by the coronavirus outbreak.
• Announcements were made in the second tranche which included free
food grains to migrant workers for 2 months, national portability of
ration cards, which permitted people to take ration from any public
distribution unit in the country.

10. 3RD TRANCHE
Size: ₹1.5 lakh crore
(0.75% of GDP)
SI No Measures ₹Crore
1 Food Micro Enterprises 10,000
2 Pradhan Mantri Matsya Sampada Yojana 20,000
3 TOP to TOTAL: Operation Greens 500
4 Agri Infrastructure Fund 1,00,000
5 Animal Husbandry Infrastructure Development
Fund
15,000
6 Promotion of Herbal Cultivation 4,000
7 Beekeeping Initiative 500
Sub Total 1,50,000

11. The 3rd Tranche included:
• Financing facility for agri- infra projects: ₹1, 00,000 crore.
• Scheme for formalisation of Micro Food Enterprises: ₹10,000 crore.
• Funding for fishermen: ₹20,000 crore.
• Animal Husbandry Infrastructure Development Fund to be set up:
₹15,000 crore.
Here, money was allocated for the Agricultural, Animal Husbandry and
the ancillary sectors.
The government also declared that the Essential Commodities Act will be
amended to deregulate prices of cereals, edible oils, oilseeds, pulses,
onions, potatoes etc.

12. SI No Measures ₹Crore
1 Viability Gap Funding 8,100
2 Additional MGNREGA Allocation 40,000
Sub Total 48,100
4TH TRANCHE
Size: ₹8,100 crore
(0.04% of GDP)
Fiscal cost: ₹40,000
crore (0.2% of GDP)

13. The 4th Tranche included:
• Defence FDI hiked to 74% from 49%.
• Viability gap funding (VGP) for social infrastructure.
The 5th Tranche included:
• New policy for public sector enterprises, strategic sectors to be notified
in which there will be at least one, but not more than four, PSEs in
addition to private players.
• Limit of state borrowings increased to 5% from 3% of GSDP.
• MGNREGA gets additional ₹40,000 crore.
The fourth and fifth tranche of the investment largely dealt with bringing
about structural reforms.

14. While the five tranches of
stimulus package
announced by the
government totalled
₹11,02,650 lakh crore, the
relief measures declared
by the government are
worth ₹1,92,800 crore.
The RBI package which is
pegged at ₹8, 01,603 crore
includes measures like
moratorium on loan
repayments for all
borrowers and interest
rate cuts etc.

15. • The much-touted economic stimulus package unveiled by
the NDA government in order to revive the Indian
economy, has failed to boost the demand and enthuse
the markets.
• The announcements made by Finance Minister Nirmala
Sitharaman over the five day period fell extremely short
of expectations on the demand-side reforms, triggering
an intense selloff in the domestic market.
• The lockdown and its aftermath may prove expensive for
the economy as Goldman Sachs predicted it to shrink by
5% in 2021 fiscal year.

16. AtmaNirbhar Bharat Package
• Promised ration: 5 kg of food grains
and 1 kg of gram.
• But in reality not even half of the
promised ration reach the poor
people.
• According to the Ministry of
Consumer Affairs, Food and Public
Distribution, only 33% grains and
56% gram have been allocated to the
poor/migrant labourers.
It has become difficult for the
nation’s poorest section to afford
even two meals, according
to the research organisation
Development Alternatives' latest
report.

17. • Most enlisted changes that the government is providing us are either loans or
loan guarantees or credit facilities.
• I believe, in the long term, instead of relieving stress of the public, this would
increase the stress of paying back the loans.
• Prior to this, I expected the government to implement direct money transfers
into people’s account who needed them.
• Taxpayer money counted in stimulus. TDS reduced by 25% and EPF reduced
from 12% to 10% for 3 months: This does increase liquidity and cash flow in
the economy but people don’t receive more money overall.
Barclays believes the real stimulus amount to be near ₹1.5 Lakh Crore.
HSBC India estimates the real stimulus amount to be 1% of India’s GDP
amount and not 10%, hence about ₹2 Lakh Crore.

18. • The AatmaNirbhar Package failed to boost the confidence and
bring optimism among the corporates, as the focus of the
package is more on indirect benefits than on direct benefits.
• The collateral-free or unsecured loans announced for MSMEs
may lead to higher default by the companies and lead to
higher NPAs.
• Moreover, the higher default rates will also increase the cost
burden of the government, as it may have to provide cushion
to the ailing banks.
• The total government expenditure incurred through the
package is only 1% of India’s GDP growth. As such these
measures will not be adequate enough to boost the demand
sentiment in the economy.

19. • All in all, the AtmaNirbhar package was a bold attempt to help
the world's fifth largest economy as it hurtles towards its first
full year contraction in four decades.
• The package should have also included a clear focus on
addressing the immediate need of cash by the poorest
sections of the society who were heavily affected by the
pandemic with a direct strategy to put money in their hands as
quickly as possible.
• The package had good scope of being extremely impactful for
the good and although it does solve several issues the country
has been facing for decades, I believe this was a lost
opportunity.