May 18, 20227 min read

Aatmanirbhar Bharat – A Socio-legal and International Analysis

On May 12, 2020, Shree Narendra Modi made a declaration to the nation of the kick start of the Aatmanirbhar Bharat campaign by announcing a special economic package of about Rs. 20 Lakh Crore to ease the nation in producing, manufacturing, and consuming products made within its boundary. It was a response to the economical crisis being suffered by the country during the Covid-19 pandemic.

What is Aatmanirbhar Bharat?

Aatmanirbhar Bharat is a passionate economical philosophy of Prime Minister Narendra Modi and the Bhartiya Janta Party of making India a fully self-reliant nation. It is basically about promoting local products from different parts of the country. This campaign is going to be carried out in phases. Precisely-

Phase I – Sectors like electronics, medical textiles, plastic, and toys will be covered under the promotion of local manufacturing and exports.

Phase II – Local promotion of products falling under steel and pharma, gems and jewelry, etc will be covered.

This campaign also covers and complements the ‘Make in India initiative’ encouraging swadeshi manufacturing.

Goal and Implementation

Through this vision of Aatmanirbhar Bharat, PM Narendra Modi wants to achieve an ecosystem that allows Indian companies highly competitive and efficient on the global stage. During the pandemic, the labor force in India saw an era of dual migration i.e. from urban areas to the villages and from the villages to urban areas. Being uneducated, these people cannot meet their basic necessities of life through casual urban employment or agriculture. Aatmanirbhar Bharat Abhiyan was launched around this time to give a boost to industrialization, thus creating job opportunities for the labor forces. For achieving a better success rate, this campaign is being implemented in a step-wise process. The first step in achieving the goal of this campaign the government was to come up with performance-linked incentives schemes for those sectors which are extensively dependent on imports. This is to help the country establish a supply chain of products that are critically needed in the future like pharmaceutical ingredients, man-made fibers for textiles, and electronic devices within its boundaries. Economists believe this scheme is going to give fuel to India’s manufacturing growth in the coming years.

Goals:

Support State Governments: State governments will be given extra financial assistance as their borrowing limit is increased from 3-5% for the year 2020-21 thus enabling them to borrow some extra resources of about rupees 5 lakh crore. However, the borrowing is limited to Ration, Revenue, and Electricity.
Enable Technological Education System: Schemes related to education are to be implemented after the pandemic. These schemes include the National foundational Literacy and Numeracy Mission, PM e-Vidya Mandodarpan, and New National Curriculum and Pedagogical Framework.
Provide Employment through Schemes (MNREGA): Around 40,000 Crore Rupees are invested under Mahatma Gandhi Rural Employment Guarantee Scheme by the government to help migrant workers by providing employment in rural areas. It will also boost rural development.
Increase Investment in Health Sector: The health sector has gained great importance due to the pandemic thus prioritizing the need for investment in primary health centers by the government in both rural and urban areas. Hence, the government has increased the flow of funds to health schemes and reforms.
Shift from Globalization to Localization: This is the most important goal of Aatmanirbhar Bharat Abhiyan. Industries dependent on foreign products have to restore their processes of pronouncement to the local level. The discouragement of foreign imports and encouragement of local businesses in Make in India Mission, 2014 is the main rule of this campaign.

Implementation:

Shree Narendra Modi has introduced five pillars of this campaign to the nation.

Economy: This is the first and foremost pillar of self-reliant India. As a common view says that a country should have the perfect balance between globalization and self-reliance, with this scheme the government of India wants to prosper the Indian economy which suffered a great loss during the pandemic by pursuing food and energy supply on their own.
Infrastructure: This is the second pillar of the Aatmanirbhar Bharat campaign. Economic infrastructure is the root of every economy and is of great importance to boosting the economy of any country. The government plans to make a top-class infrastructure for India so that it can compete well with other countries and bring a modern era to India.
Technological System: The third pillar of the campaign is bringing a technology-driven system as it is essential for a world that is fast-paced. Technologically intervened businesses are improved in operations and the cost of setting up the business is also reduced greatly thus helping the economy in the long run.
Vibrant Demography: The study of the human population is the fourth pillar of the campaign’s success. India has a maximum youth population and hence, can help the nation be self-reliant successfully According to the government, vibrant demography is the best source of energy in becoming self-sufficient.
Supply and Demand: The fifth and the last pillar of self-reliant India is supply and demand which is a relationship between the number of services or goods the producer wishes to sell and the amount needed by the consumer. It is very important to establish a supply system and supply chain in a manner that the demands of consumers are fulfilled. The country should utilize the supply and demand chain in full capacity witnessing the demand for goods.

Obstacles

Though this is definitely a good start there are several challenges weighing down the Aatmanirbhar Bharat campaign. Precisely-

Manufacturing Cost: As a low-cost production base, India is cheaper than most of the developed economies but not than other emerging countries like South Korea and China. Power cost in India is higher than that of Vietnam and China (11, 8, and 9 respectively). Labor power is low in the country but in terms of productivity, Brazil, China, and South Korea are way ahead of India. And as of skillset Indian rank is nowhere near to these countries and therefore, Indian companies are pretty much forced to spend a fortune in training their workforce.
Logistics Cost: Logistic Cost in India at 14 percent of GDP is way more than other countries around the globe which have about 6-8 percent of GDP on average. In India, logistic cost only includes the transportation cost whereas planning, warehousing and procurement are also included in the cost in other advanced economies yet India’s logistic cost is three times that compared to these countries.
Compliance Cost: Even after continuous attempts by the Indian government to reduce high regulatory and other compliance costs being imposed on Indian companies through digitalization, they continue to remain high putting India on a disadvantageous stage in the global market.
Investment in Research and Development (R&D): The total investment in Innovation and Research and Development has been declining for the past many years. Most of the spending on Research and Development happens in the space and defense sectors and in the auto and pharmaceutical industry in the private sectors. It is still lagging as compared to developed countries and investments in technologies being referred to as cutting-edge are inadequate.
High-Interest Rates: It is important for interest costs to drop for Indian products to compete efficiently around the world. As of now, India is having low-interest rates but they are not that low compared to Japan or US.
Trade Policies: India has a pathetic record when it comes to trade policies. The agreement on India-EU Free Trade is stuck for the past seven years after going through 16 rounds of talks and the agreement on Comprehensive Economic Cooperation with Australia has come to no conclusion even after 9 rounds of talks in past eight years. On the other hand countries like Vietnam and Bangladesh have been signing trade deals to attract investments and become more competitive.

Legal Outlook

Nirmala Sitharaman, the Finance Minister of India, publicized the package scheme in 5 channels while explaining how various sections of the society like self-help groups, factories, middle-class citizens, etc will be catered to by this special package. With the introduction of this scheme, provisions, interpretations, and the basis of the law saw some amendments. Arenas of Law and Statutes vividly examined and scrutinized by this scheme are:

Income Tax Act, 1961: TDS rate was reduced by 25% and is applicable for payments of contracts, dividends, etc. The date of the filing of income tax returns was extended along with the dates of tax audits.
MSME Act, 2006: The definition of the Micro, Small, and Medium Enterprises Development Act was changed by merging it under one category and eliminating it as the manufacturing and service enterprises. Other than this, collateral-free loans for MSMEs can be availed up to 3 lakh crore rupees.
Insolvency and Bankruptcy Code, 2016: The ease of establishing and setting up a business was enhanced by raising the minimum threshold to start an insolvency proceeding to 1 crore rupees (earlier 1 lakh). Section 240A IBC would also be attaining a special insolvency resolution framework.
Company’s Act, 2013: Company’s Act would be decriminalized in a self-sufficient nation. Seven compoundable offenses were demolished leaving the other five to be dealt with in an alternative framework.
Real Estate (Regulation and Development) Act, 2016: Additional 6-month period was provided to government contracts in order to complete awaiting projects. Extension in completion and registration of real estate projects was done to avail buyers to get their booked homes timely.
Essential Commodities Act, 1955: Food items like pulses, onion, cereal, etc were deregulated with zero stock limit to any product except during natural calamities and other national emergencies.
Miscellaneous Laws: A new law was proposed to be implemented allowing the selling of products by farmers with no price barrier. A new statute to help farmers get involved with large retailers, wholesalers, and processors with transparency have also come forward.

Conclusion

This campaign has promised a huge goal of making India completely self-reliant giving hope to all local businesses which have been suffering because of globalization. To attain this goal and do as promised, the government must decentralize the running policies, make them eco-friendly and focus on rural areas and labor. It has to make sure poor people are privileged. All the obstacles mentioned above also need to be tackled for the success of a swadeshi India by stepping further with the quantum of improvement in a desirable timeline. ‘Vocal for Local’ will achieve heights for the country if this mission succeeds but for that each and every citizen along with the government will have to join hands and work together.

Aatmanirbhar Bharat – A Socio-legal and International Analysis

What is Aatmanirbhar Bharat?

Goal and Implementation

Goals:

Implementation:

Obstacles

Legal Outlook

Conclusion

Foot Notes

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