Atmanirbhar Bharat Abhiyan Economic Package Explained

Author: Tarsha Swami 

The future is a fickle mistress. It has never quite been in the realm of mankind’s understanding. We often hear that out past informs our future and for the most part that is true. A pattern of behaviour or an existing system can tell us a lot about the possibilities in our future. However, even semi-accurate predictions of the future are now truly a thing of the past. We all live in strange times where the future has become imponderable. Yet we are forced to create a model for our future blind. 

Personally, it's extremely difficult for me to read the news now. I live in a very sheltered bubble with all possible necessities at my doorstep. The very though of going hungry for a night has never been in my realm of possibilities which makes my limited understanding of a large chuck of my country’s needs even more intolerable. Watching stories about migrant workers walking long distances, being denied safe passage or even shelter with no possible alternatives too painful to express with words. Thus, I find the need to understand even greater. 

I don’t think any of us are left with the luxury of living in bliss-full oblivion. As indian citizens one of the most important things to remain informed about is Prime Minister Narendra Modi’s new Atmanirbhar Bharat Abhiyan economic package announced by Finance minister Nirmala Sitharaman on the 17th of May. This is probably why a total failure at economics and maths found herself studying liquidity risks and googling the definition of assets today. 

What does the Atmanirbhar Bharat Abhiyan economic package entail?

The entirety of the package total up to Rs. 20.97 Lakh Crores. This makes it one of the largest economic packages announced by any government across the world worth 10% of the country GDP (Gross Domestic Product). In the midst of a recession this might be our only solution or the pathway to the country’s economic collapse. This package comprises of three major components. The first aspects is the government's actions prior to Prime Minister Modi’s actions before his speech on the 12th of May, the second are the liquidity measures taken by the Reserve Bank of India over the course of the last two months and the third are the five tranches for investments. 

What are the five tranches of the economic package?

The five tranches of the economic package have been delegated based on the idea of the country spending your way out of the current economic crisis basically restarting business as well as providing aid. The largest amount from this package has been delegated to MSME (Micro, Small and Medium Enterprises), NBFC (Non-Banking Financial Company) and the Power sector. In laymen’s terms, MSME are basically smaller cooperations involved with manufacturing or the provision of certain services while NBFC deal with the provision of loans and advances. The second tranche involves providing financial support to the poor including farmers, migrant workers etc. the third tranche is allotted to the agricultural sector and the fourth to ‘new horizons of growth’ in terms of mining, aerospace and defence production in tandem with the fifth tranche equal up to ₹ 48,100 Crores. 

What does this all mean for the country?

There is a lot of information that is yet to be learned about this entire package with the distribution system, the allotment of the money and a concrete plan to carry out these investments yet to be announced. New information is still trickling in and making a concrete analysis of this plan is impossible. However, potential benefits and consequences can still be discussed and must be kept in mind in-order to ensure oversight. The sheer amount being invested, in the middle of an economic recession, is is truly nothing short of gambling. 

There is one country who managed to successfully move itself out of a recession using the same system of aggressive spending in the economy. This country grew to be the biggest player in the global economy. However, while America saw great success, smaller countries like Venezuela suffered great consequences. India is notorious for having slow bureaucratic processes and rampant corruption. This is a cause for concern with this plan. But for a moment, just putting aside the the possibility of corruption derailing these investments, a bigger concern are NPA’s (Non-performing assets).

This plan has basically been created to provide banks with collateral making them more inclined to issue non-collateral loans to small business to restart production. The biggest challenge arises in the event that small businesses are unable to recoup losses. Banks will have several non-performing assets, potentially crashing the economy. There is a lot to learn but at this time extreme diligence while carrying out this plan must be ensured by every citizen of the country. Understanding this plan and the way forward, including hearing a balanced opinion is necessary for understanding the way forward for this country.