WILL THE 20 LAKH CRORE ECONOMIC RELIEF PACKAGE FULFILL THE PURPOSE OF AN ATMA NIRBHAR BHARAT?

OVERVIEW

Amidst the pandemic which has brought the global economy to its knees, the Indian Government introduced an economic relief package of Rupees 20 lakh crores, approximately 10% of the national GDP, making it one of the most substantial relief schemes in the world after Japan’s scheme which happened to be around  21% of its GDP and of U.S.A’s which was 13% of its GDP. P.M. Narendra Modi in his address to the nation on 12^th May introduced this scheme and named it AATMA NIRBHAR BHARAT YOJANA (ANBA), as the name suggests the main objective of this scheme is to make India self-reliant which technically directs the major policies of this scheme towards increasing the supply which in turn showcases the Government’s will to increase the exports. This isn’t all that is there to it though, self-reliance is one of the goals of the scheme which is now merged with the schemes which focuses on keeping the economic condition stable during the lockdown period. 

This mega package includes tax breaks for small businesses, incentives for domestic manufacturers and helping the poor and needy to pass this phase by providing them with free food grains and cash to certain sections.

BREAK UP OF THE SCHEME

(Earlier Reforms)

First Tranche (1.92 Lakh Crore)

•   It includes distribution of free food grains, gas and cash to certain sections under Pradhan Mantri Jan Kalyan Yojana.[1]

Second Tranche (8.01 Lakh crore)

•       It includes liquidity measures announced by the Reserve Bank of India[2]

(New Reforms)

First Tranche (5.94 Lakh crore)

•   It includes credit services for small businesses and supports shadow banks and electricity distribution companies.[3]

Second Tranche (3.10 Lakh crore)

•       It includes distribution of free food grain for migrants for at least 2 months and credit services for farmers. [4]

Third Tranche (1.5 Lakh crore)

•   It includes Spending on Agri infrastructure and other measures for agriculture and allied industries.[5]

Fourth and Fifth Tranche (48,100 crores)

•   It includes measures to deal with structural reforms such as Viability Gap Funding and Additional MGNREGS(Mahatma Gandhi National Rural Employment Guarantee Scheme) allocation.[6]

RELIEFS PROVIDED

INCREASING SUPPLY– The major objective of Aatma Nirbhar Yojana is to make India Self Reliant which technically means that there will be an emphasis on producing more consumer goods and local manufacturers are expected to fulfil the market demand as well as maximise the exports. That’s why P.M. Modi expects citizens to utilize more and more Indian made products to motivate domestic producers to produce more. According to Noble laureate Abhijeet Banerjee, the proposed relief scheme is “certainly not an eyewash”. He observed that this supply dedicated scheme will have some ground-breaking impact and will show its effects in the long run. [7]

To ensure this, the government in the present scheme has tried to put as less burden as possible on the MSMEs and small producers by cutting down interest rates on loans and giving them tax benefits. For example, the Mudra Yojana, the primary focus of which is to promote MSMEs by providing them loans on low-interest rates. 

AGRICULTURE- The government has specifically focused on this sector as agriculture plays a pivotal role in the Indian economy by providing means of employment to over 60% of the population. Hence 1.5 lakh crore will be directed towards strengthening this sector. These investments will liberalise the trade in this sector by amending the Essential Commodities Act, 1955 and will empower farmers by providing them with the freedom to sell wherever they want to which will benefit them in the long run.

MANUFACTURING AND SERVICE INDUSTRY –   relief is provided to the manufacturing sector and especially to the MSMEs by providing them with government-guaranteed loans totalling to an amount of Rs. 3.7 lakh crore. The Government is aiming to provide such reliefs to the MSMEs as they are an integral part of the Indian economy as they ‘ provide employment to around 120 million persons and contribute around 45% to the overall exports from India’ as per a report of Confederation of Indian Industries.  This easy credit scheme will help to preserve the interests of these enterprises and will prove to be a forerunner scheme in achieving the vision of making India self-reliant. Similar relief is provided to the service sector as well, as it also comes under the purview of MSMEs under section 2 (e) of the MSMED Act 2006. 

MIGRANTS– As per the ANBA Scheme, an amount of 3.10 lakh crore will be utilised to provide migrants with free food grains. This scheme comes under the new schemes introduced by PM Modi during his address to the nation on 12 May which is the Covid-19 Relief Fund tranche of the ANBA scheme.

AMBIGUITIES IN THE PACKAGE

The government emphasised too much on supply without considering the fact that to optimally utilize the increased supply, demand should also be proportionate to it. This means that if the government wants the people to utilize homogenous products more then they have to make sure that people have money in their pockets and the present scheme lacks to cover this problem. Observing the current scenario of nationwide lockdown where individuals are not earning either at all or an amount sufficient only to survive this difficult period of time. Attracting them to buy these products is almost impossible. The government tried to deal with this problem by making it mandatory for every corporation to pay full wages to its employees through issuing an order dated 29 March (which has now been withdrawn by the government by issuing an order dated 17 May). But this move is also too ambiguous because in the present scheme the government has diverted their concern in providing relief majorly to the MSMEs, there is neither any kind of tax incentive or any other relief provided to large businesses which employ a large chunk of the workforce. How can one expect organisations to generate payrolls when they are at the stage of collapsing?

The relief concerning providing migrants with free food grain is similarly ambiguous because the state governments do not have any records stating the number of migrants present in their state. This information recently came into the knowledge of the central government when the Chief Labour Commissioner’s direction of providing state wise and district wise data of migrants was not rendered[8]. Now if the government does not have any data regarding a number of migrants then how will they make sure that the grains have reached the right hands?

CONCLUSION

The ANBA scheme which is advertised as the Covid-19 relief fund does not match its advertised purpose because the package focuses on the bigger picture of the advancement of the economy through an increase in export and supply but not focusing on providing immediate relief. The achievement of the vision of Self-Reliant India seems distant if it is to be achieved by putting the present situation of the country at stake. Concentrating on future goals rather focusing on improving the current situation where people are more likely to die of starvation than the pandemic itself, will certainly lead to catastrophic outcomes. Indeed, the package has certain revolutionary schemes which will benefit the nation in the long run but presently there is a requirement of a scheme which aids the present situation which is definitely in turmoil.

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ABOUT THE AUTHOR

Yashovardhan Agarwal is a first-year law student at Hidayatullah National Law University.

In Content Picture Credit: MyGov Blogs