LARRDIS 1 Reference Division
MEMBERS REFERENCE SERVICE
LARRDIS
LOK SABHA SECRETARIAT
NEW DELHI
REFERENCE NOTE
For the use of Members of Parliament NOT FOR PUBLICATION
No.1/RN/Ref/January/2021
ATMANIRBHAR BHARAT
Prepared by Pradeep Kumar, Research Officer, supervised by Dr. Tushar Kant, Joint Director, under the guidance of Shri Naushad Alam, Director and Smt. Kalpana Sharma, Additional Secretary .
The Reference Note is for personal use of the Members in the discharge of their Parliamentary duties, and is not for publication. This Service is not to be quoted as the source of information as it is based on the sources indicated at the end/in the context. LARRDIS 2 Reference Division
ATMANIRBHAR BHARAT India’s lockdown to maintain social distancing to minimize the transmission of the Covid19 pandemic has brought the challenges caused by global supply chain disruptions into sharp focus. The world also saw the danger of relying on one country. The government has responded to this by launching the 'Atmanirbhar' (self-reliant) programme to make India a nerve centre of global supply chain. Atmanirbhar Bharat is the vision of the Prime Minister of making India a self-reliant nation. The present paper discusses key highlights of Atma Nirbhar Bharat Packages and their implementation.
Introduction The Corona Virus outbreak in China has led to large-scale shortage of inventory in the domestic market. The closure of factories in China affected Indian industries, which import components, intermediaries and raw- materials from China like the pharmaceutical, electronics and automobile industries. According to a news report, in India, before the Pandemic, certain industries were more and more dependent on Chinese imports and were under severe risk. For example, in pharmaceuticals sector (China supplies almost 70 per cent of active pharmaceutical ingredients (API) requirement for the industry); automobiles (10-30 per cent of the raw materials and base components were imported from China); chemicals and textiles. The renewable energy sector was relying on China for 80 per cent of the sector’s requirement of solar panels. Besides, several micro, small and medium enterprises (MSMEs) were dependant on Chinese imports. The disruptions due to bans on travel, closure of borders, closure of businesses, and lockdowns had a ripple effect on global trade flows1. Thus, due to the interdependence and complex nature of global supply chains, the pandemic caused widespread disruption in socio-economic sphere. There is a strong opinion to diversify supply chains from a geographic perspective to reduce supply-side risk from one country. It was felt that multiple sources of key commodities or strategic components should be identified and there must be protocols to activate alternative sources of supply in short notice. On 12 May 2020, Prime Minister Shri Narendra Modi announced a special comprehensive economic package to fight the COVID-19 pandemic in India. He gave a clarion call for Aatma Nirbhar Bharat Abhiyan or a Self-Reliant India Movement. Prime Minister outlined five pillars of Aatma Nirbhar Bharat – Economy, Infrastructure, System, Vibrant Demography and Demand.
The Atmanirbhar Bharat Abhiyan aims at making the country self-reliant and to focus on local manufacturing, local market and local supply chains. It focuses on preparing the country for tough competition in global supply chains, enhance the ease of doing business, empower MSMEs,
1 Covid-19 exposes Indian industry’s supply chain vulnerabilities, thehindubusinessline.com/opinion/covid-19-exposes-indian-industrys-supply-chain-vulnerabilities/article31224928.ece LARRDIS 3 Reference Division
attract investments including FDI and strengthen the policies for Make in India. It also aims at supporting agriculture and fisheries reforms and enhancing agriculture and animal husbandry infrastructure. It also contains measures to boost liquidity support for MSMEs, DISCOMS, NBFCs and other businesses. The Atma Nirbhar Bharat Package covers a wide section of sectors and
members of society, including migrant labourers, middle class and entrepreneurs.
AatmaNirbhar Bharat Package 2 Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman presented the details of the AatmaNirbhar Bharat Package 1.0 in a series of press conferences from 13 to 17 May 2020. Subsequently, the Finance Minister announced AatmaNirbhar Bharat Package 2.0 on 12 October and AatmaNirbhar Bharat Package 3.0 on 12th November 2020. AatmaNirbhar Bharat Package 1.0 Rs 30,000 crore Additional Emergency Working Capital Funding for farmers through NABARD Rs 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs, HFCs and MFIs to do fresh lending to MSMEs and individuals Rs 30,000 crore Special Liquidity Scheme for NBFCs/HFCs/MFIs Rs 3 lakh crore Collateral-Free Automatic Loans for Businesses, including MSMEs Rs 90,000 crore liquidity injection for DISCOMs Rs 5000 crore credit facility for Street Vendors 70,000 crore boost to housing sector through extension of Credit Linked Subsidy Scheme under PMAY(Urban) Rs 2 lakh crore concessional credit to 2.5 crore farmers under Kisan Credit Card shceme. Rs 40,000 crore for MGNREGS to provide employment. Rs 20,000 crore for PM Matsya Sampada Yojana Rs 1 lakh crore for Agri Infrastructure Fund for farmers AatmaNirbhar Bharat Package 2.0 Leave Travel Concession (LTC) Cash Voucher Scheme Special Festival Advance Scheme Special Assistance to the States: The Central Government will issue a special interest-free 50-year loan to States of Rs. 12,000 crore Capital Expenditure. AatmaNirbhar Bharat Package 3.0 AatmaNirbhar Bharat Rozgar Yojana: A new scheme to incentivize job creation during COVID-19 recovery has been launched.
2 https://pib.gov.in/PressReleasePage.aspx?PRID=1680343
LARRDIS 4 Reference Division
Emergency Credit Line Guarantee Scheme for MSMEs, businesses, MUDRA borrowers and individuals (loans for business purposes), has been extended till March 31, 2021. Production Linked Incentive worth ₹ 1.46 Lakh Crore to 10 champion sectors. 10 more Champion Sectors will be covered under the Production Linked Incentives Scheme to help boost competitiveness of domestic manufacturing. Rs. 18,000 Crore Additional outlay of for PM Awaas Yojana - Urban: It will help ground 12 Lakh houses and complete 18 Lakh houses, create additional 78 Lakh jobs. Support for Construction & Infrastructure – Relaxation of Earnest Deposit Money & Performance Security on Government Tenders: has been reduced from 5-10% to 3%. Platform for Infra Debt Financing: Rs. 6,000 Crore equity investment in debt platform of National Investment and Infrastructure Fund (NIIF), which will help NIIF provide a debt of Rs. 1.1 Lakh Crore for infrastructure projects by 2025. Support for Agriculture: Rs. 65,000 Crore for subsidized fertilizers: to ensure increased supply of fertilizers to farmers to enable timely availability of fertilisers Boost for Rural Employment: Additional outlay of Rs. 10,000 Crore is being provided for PM Garib Kalyan Rozgar Yojana to provide rural employment. Boost for Project Exports: Rs. 3,000 Crore boost is being provided to EXIM Bank for promoting project exports Capital and Industrial Stimulus: Rs. 10,200 Crore additional budget for capital and industrial expenditure on domestic defence equipment, industrial infrastructure and green energy. R&D grant for COVID Vaccine: Rs. 900 Crore is being provided to Department of Biotechnology for Research and Development of Indian COVID Vaccine. Implementation of Aatma Nirbhar Bharat Packages The progress of implementation is being reviewed and monitored regularly, almost on a daily basis. Key elements of the progress made so far in implementing the ongoing Schemes of the Aatma Nirbhar Bharat Packages are:
Rs 3 lakh crore Collateral-free Automatic Loans for Businesses, including MSMEs: As on 04.12.2020, under an Emergency Credit Line Guarantee Scheme (ECLGS), additional credit amounting to Rs. 2,05,563 crore has been sanctioned to 80,93,491 borrowers, while an amount of Rs. 1,58,626 crore has been disbursed to 40,49,489 borrowers. Total Eligible Loan Sanctioned Loan Distributed Accounts No. of Accounts Total Accounts 1,39,79,948 80,93,491 40,49,489 Amount (In Rs Total Amounts 3,18,826 (20% of 2,05,563 1,58,626 crore) outstanding)
It is expected that 45 lakh units can resume business activity and safeguard jobs through this scheme.
Rs 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs: LARRDIS 5 Reference Division
As on 04.12.2020, Public Sector Banks (PSBs) have approved purchase of portfolio of Rs. 27,794 crore and are currently in process of approval/negotiations for Rs. 1,400 crore.
Rs 30,000 crore Additional Emergency Working Capital Funding for farmers through NABARD:
Rs 2 lakh crore Concessional credit boost to 2.5 crore farmers through Kisan Credit Cards:
Special drive to provide concessional credit to PM-KISAN beneficiaries by Kisan Credit Cards.
In Phase I, 58.83 lakh KCC cards with KCC limit of Rs. 46,532 crore had been sanctioned.
Application Received KCC Cards Issued Pending Application 76.82 Lakhs 58.83 Lakhs Nil
In Phase II, (As on 04.12.2020), a total number of 110.94 lakh KCC with KCC limit of Rs. 1,07,417 crore has been sanctioned. Application sanctioned Application KCC(crop KCC(crop loan) Animal Husbandry Activities Fisheries Grand Total received loan) with AH or Fisheries Activities Dairy Poultry, Cattle & Sheep rearing etc 1,18,61,207 92,40,154 2,72,703 4,75,314 46,786 15,037 1,10,94,276
Out of this 110.94 lakh KCC sanctioned in Phase II, 92.40 lakh has been done for crop loan, 2.73 lakh for crop loan with AH or fisheries activities, 4.75 lakh for dairy, 46,786 for poultry, cattle & sheep rearing, etc, 15,037 for fisheries and 10.44 lakh cases already having KCC sanctioned by bank.
Income Tax Refunds
Central Board of Direct Taxes (CBDT) has issued refunds of over Rs 1,45,619 crore to more than 89.29 lakh taxpayers between 1st April 2020 and 8th December 2020. Income Tax refunds of Rs. 43,274 crore have been issued in 87,29,626 cases & corporate tax refunds of Rs. 1,02,345 crore have been issued in 1,99,554 cases.
Capital Expenditure: Special Assistance for States:
Under Aatma Nirbhar Bharat Package, it was announced that Special interest free 50-year loans will be given to States for capital expenditure for Rs. 12,000 crore.
As on 07.12.2020, so far, 27 State Governments have submitted proposals under the Scheme for new and ongoing capital works/projects.
Projects amounting to Rs. 8455.61 crore under Part-I and Part-II of the Scheme have been approved so far and an amount of Rs. 4227.80 crore, as 1st installment, has been released to the States. Other Important Features
Rs 18,000 crore additional outlay for Pradhan Mantri Awaas Yojana-Urban (PMAY-U)
Rs 1.10 lakh crore Platform for Infra Debt Financing
Rs 20,000 crore Subordinate Debt for Stressed MSMEs
Rs 50,000 crore Equity infusion for MSMEs through Fund of Funds LARRDIS 6 Reference Division
Government's persistent efforts for payment to MSMEs
Rs 1 lakh crore Agri Infrastructure Fund for farm-gate infrastructure for farmers
Animal Husbandry Infrastructure Development Fund (AHIDF) - Rs. 15,000 crore
Rs 20,000 crore for Fishermen through Pradhan Mantri Matsya Sampada Yojana
Rs 70,000 crore boost to housing sector and middle income group through extension of Credit Linked Subsidy Scheme (CLSS)
Boost for Employment AatmaNirbhar Bharat Rozgar Yojana
Rs 40,000 crore increase in allocation for MGNREGS to provide employment boost
A total of 273.84 crore Person days have been generated as of date which is 49% higher than last year.
Rs. 90,000 crore Liquidity Injection for DISCOMs
Liberalised Regime in Coal Sector
Impact of Atmanirbhar Bharat on Economy These are significant measures that may have a positive economic impact in the medium and long term. It is also important to see that the policies must strive towards reviving the demand in the short term. The opening up of economy and implementation of a broad set of measures under 'Atmanirbhar Bharat' package have led to a continuous improvement in economic recovery. India’s economy with persistent improvements in economic indicators is showing a V-shaped recovery. The agricultural sector remains the bright spot of Indian economy, with healthy year-on-year growth of 2.9% in Rabi sowing, accelerating tractor sales. This, along with 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 PM Garib Kalyan Yojana’s success in alleviating rural distress3. Also, the industrial production growth ran parallel to the festive season of October and rose to an eight-month high, led by manufacturing and electricity sector. Continuous surge in commercial and industrial activity has been further corroborated by continued growth in PMI manufacturing, power demand, persistent improvement in E-way bills generated and highway toll collection rising above pre-Covid levels. Monthly GST collections attained their record levels in December, 2020. The growth momentum in rail freight traffic remains upbeat, as passenger earnings begin to recover, port cargo traffic grows, and domestic aviation picks up further. With domestic activity picking pace, India’s merchandise trade deficit rose, as imports saw positive growth after nine months. India experienced a current account surplus for the third straight quarter in Q2:FY21 - $15.5 billion or 2.4 percent of the GDP as compared to $19.2 billion (3.8
3 Monthly Economic Review, Ministry of Finance, December 2020 LARRDIS 7 Reference Division percent of GDP) in Q1:FY21. Total FDI inflows in the first seven months of the financial year stood at a record high of US$ 46.82 billion, 11.3 per cent higher as compared to first seven months of FY2019-20. India’s foreign exchange reserves climbed to a new high of US$ 586 billion as on 15th January, 20214.
Conclusion Self-reliance doesn't mean building an economy in isolation or inward looking. It implies, investing in sectors that are strategically critical to the country so that our dependence during vulnerable times like Covid 19 pandemic should be minimised. Atmanirbhar Bharat Abhiyan contains bold reforms initiatives across various sectors to promote business, attract investment, improve local supply chain and further strengthen Make in India; which will result into driving the country's economy towards self-reliance in coming years. However, focus should be on the effective implementation of the reforms. There is a need to nurture an environment of policy certainty with regard to taxes, foreign direct investment rules and payment of dues to small businesses can have a meaningful impact on kick starting the private capital spending cycle.
REFERENCES: 1. Monthly Economic Review, Ministry of Finance, December 2020 https://dea.gov.in/sites/default/files/December%202020_1.pdf 2. Lok Sabha Unstarred Question No. 1260, dated 19.09.2020. http://164.100.24.220/loksabhaquestions/annex/174/AU1260.pdf 3. PIB Press Release dated 13 DEC 2020. https://pib.gov.in/PressReleasePage.aspx?PRID=1680343 4. Ethical wealth creation for a self reliant India, by Dr. K.V. Subramanian, Yojana, July 2020. http://10.21.202.209:8380/media/123513.pdf 5. AtmaNirbhar Bharat 3.0, Ministry of Finance, 12 November 2020. https://static.pib.gov.in/WriteReadData/userfiles/MOF.pdf 6. Covid-19 exposes Indian industry’s supply chain vulnerabilities, https://www.thehindubusinessline.com/opinion/covid- 19-exposes-indian-industrys-supply-chain-vulnerabilities/article31224928.ece
4 Ibid.