Prime Minister Narendra Modi’s response to the economic adversities confronting the Indian economy due to the COVID-19 crisis has been the “Atmanirbhar Bharat Abhiyan.” Is the PM’s call for a self-reliant India to be myopically interpreted as import substitution or does this call respect the profoundness of the very concept of a self-reliant economy? The monetary package underlying the Atmanirbhar Bharat Abhiyan inclines one to, at least prima facie, believe that the latter is true. This article takes a deeper dive into whether this is indeed the case.
First and foremost, making an economy self-reliant must at best refer to a medium-term horizon if not the longer term. It surely is not something that can be achieved in the short run.
Farmers are one of the pillars of an economy. The economic health of a farmer matters significantly to whether an economy can be regarded as self-reliant. The greater ambition for a self-reliant economy is to transform the farmer into an agripreneur. India’s farmers are bound by the shackles of low productivity, low incomes, lack of access to institutional credit, indebtedness etc. They are reeling under the burden of a fragmented agricultural marketing ecosystem and climatic uncertainties and vagaries of nature. A self-reliant farmer is fundamental to the vision of a self-reliant India. Has the Atmanirbhar Bharat Abhiyan spoken to these concerns?
For the longest time, the measures of financial inclusion and access to institutional credit were redundant for the farmer given low productivity and low incomes. From the perspective of low incomes, the three major agricultural market reforms announced by the government under the Abhiyan has ended a longstanding wait. The first of these reforms includes the provision of INR one trillion as Agri Infrastructure Fund to bridge the gaps along the agricultural value chains. The second reform pertains to the elimination of the Essential Commodities Act and the third being the introduction of a new legislation that will empower farmers to sell their produce at remunerative prices by eliminating inter-state barriers to trade and articulating a framework for e-trading of agricultural produce. The question of low productivity still glares into the face of the small and marginal landholders, which constitute the majority of the farming community in India.
We need bold, out of the box reforms that can ensure access of farmers to technology that can reduce natural or climatic vagaries that will determine their crop producing capacity. Loans can then be aligned to the repayment capacity of the farmer based on the estimation of crop production. Such measures will reduce the probability of debt, making loan waivers irrelevant. In the view of this author, loan waivers cannot be accommodated in the vocabulary of self-reliance of farmers. They can be at best perceived as crutches, which the farmers need to eventually abandon.
A nation cannot aspire to be self-reliant with a large portion of the working-class population being unemployed. Informal employment cannot be the answer to the question of unemployment. The Atmanirbhar Bharat Abhiyan does involve a conversation about fast-tracking investments and measures to promote investment in the country, schemes to boost manufacturing, upgrading and augmenting industrial infrastructure, initiatives for improving the quotient of Ease of Doing Business and so on. In envisioning an Atmanirbhar Bharat during his address at the Confederation of Indian Industry (CII), PM Modi alluded to the concerns of high logistics cost and R&D expenditure as well. The moot question remains as to how does this translate into reality; and does this reality have space for not just employment, but formal gainful employment? There is no strategy outlined for the formalisation of the economy unless it is being tacitly assumed by these measures.
Over 90 percent of the Indian workforce operates in the informal sector. It means irregular and uncertain earnings, lack of job and social security, and lack of appropriate working conditions. The reality of an Atmanirbhar Bharat cannot coincide with such a large informal sector. The recent Covid-19 crisis has exposed the vulnerabilities of the informal workers. The Covid-19 pandemic has left them in the lurch -- without food, income and in several cases, even shelter. The picture that is painted contradicts the tenet of self-reliance. Nevertheless, the Atmanirbhar Bharat Abhiyan falls short of announcing a consolidated, comprehensive set of measures for social protection apart from some isolated initiatives like affordable social rental housing which appear to be too little too late.
Social protection in Atmanirbharta has to be the last resort. When an unexpected shock hits an economic agent, (s)he falls back on social security. Such security is meant to ease and cushion against unexpected frictions created in the normal course of events. This is the stage at which a self-reliant economy should find itself and this should be the functional role assigned to social security.
As far as transforming India into a global manufacturing hub is concerned, the measures should not be protectionist since they run the risk of breeding inefficiencies in the economy. That cannot be called self-reliance. Measures that enable the industry to emerge and remain efficient and resilient in the face of any form or level of competition is when self-reliance can be said to be truly achieved. Hence, there has to be careful thought in tweaking policies in order to favour domestic industries. Rather than import substitution, India needs to organically compete with imports in a globalised world than block imports from particular economies artificially. Through this approach, India can become a net exporter from being a net importer.
One of the significant reasons of India’s unemployment problem is its unemployability. India’s unemployability calls into question the quality of education provided in our schools and higher education institutions. The Atmanirbhar Bharat Abhiyan does focus on skill development and mapping employment opportunities to the skill sets of migrant workers. However, any such endeavour is incomplete without a complete overhaul of the educational system of the nation. Doing so would resolve the problem of the educated unemployed. Furthermore, the question of generating employment opportunities for the migrant workers according to their skill sets cannot be answered in isolation from the demand of the industry. Hence, endeavours to make the country a manufacturing hub and the generation of employment opportunities must go hand in hand.
While all of the plans under the overarching theme of the Atmanirbhar Bharat Abhiyan paint an ambitious picture of a self-reliant India, the catch lies in implementation. The implementational hurdles that confront the nation are well-known. Will corruption, red-tape, competitive federalism, failure of co-ordination between various authorities, overlapping jurisdictions and bureaucratic hurdles in general allow the dream of Atmanirbhar Bharat to become a reality? The largely undelivered promise of maximum governance minimum government made by the Modi 1.0 government is key to this ambition. If India succeeds in crossing this bridge, then a new ray of hope awaits on the other side.
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Renita DSouza is a PhD in Economics and a Fellow at Observer Research Foundation Mumbai under the Inclusive Growth and SDGs programme. Her research focus ...Read More +