Strengthening all stakeholders was a key point Modi stressed at a time of loss of income, especially among migrant workers, dampened consumption and an economy that had ground to a halt
On 12 May, Prime Minister Narendra Modi said that the dream of making the 21st century an Indian century can be achieved through the route of self-reliance. Mint takes a look at how this journey took off.
According to Modi, the road to self-reliance entails a quantum jump in the economy, infrastructure, efficient technology-driven systems, vibrant demography and extensive leveraging of the demand and supply chain.
This idea has been the basis for the three stimulus packages announced so far this year to aid economic recovery.
Strengthening all stakeholders was a key point Modi stressed at a time of loss of income, especially among migrant workers, dampened consumption and an economy that had ground to a halt. Reforms and pushing exports are also part of this drive.
How has it done?
So far, it has mainly taken the shape of aid packages. Economic packages were rolled out in May, October and November, offering relief to the poor and migrant workers, credit flow to businesses, liquidity to power distribution utilities and relaxation in compliance requirements to individuals and firms.
Farm reforms, which lifted restrictions on holdings and supply of produce and sought to usher in private investments, however, have led to protests by farmers. The Centre also allowed the coal sector to start commercial mining. The borrowing ceiling was raised for states and income tax relief was offered to home buyers. The Centre has substantially stepped up its borrowing to fund higher spending on rural jobs, housing and infra projects and fertilizer subsidy.
To encourage domestic manufacturing, a ₹1.46 trillion incentive scheme was also announced.
What is the package size?
The first round of stimulus and humanitarian aid package, which included giving credit cards to farmers and emergency working capital to businesses, totalled ₹20.9 trillion and was the largest. Including the other two, the Centre’s economic package goes up to ₹24.3 trillion. If the central bank’s steps are included, it touches ₹29.87 trillion.
What is the progress?
Funds are being released under various schemes, but the production-linked incentive scheme may take a couple of months to be rolled out as its design needs to be foolproof. More than half of the ₹3 trillion collateral-free loans to small businesses have been issued to 4 million businesses.
Procurement from micro, small and medium enterprises (MSMEs) by government agencies and state-run firms as well as payments to them have more than doubled in October compared to May. In October, sourcing from MSMEs touched ₹5,124 crore.
Does self-reliance mean an inward-looking economy?
Use of tariff and non-tariff barriers to give domestic producers an edge over imports is a key element of the drive for self-reliance, but policymakers insist that these are temporary measures taken keeping in mind international rules.
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