AatmaNirbhar Bharat Abhiyaan

The AatmaNirbhar Bharat Abhiyaan (ANBA) or self-reliant India movement is a special economic package of ` 20 lakh crore, announced by the prime minister on  May 12, 2020. In what has come to be called AatmaNirbhar Package 1.0, an ambitious package billed at 10 per cent of the country’s GDP, it seeks to make the country an active participant in the global supply chain and empower the poor labourers and migrants. It is a comprehensive mission which proposes initiatives to be undertaken by various ministries to boost the economy. (It is to be noted that ` 20 lakh crore also includes what the government had already announced, i.e., 1.7 lakh crore fiscal package announced on March 26 as well as the measures taken by the Reserve Bank of India in February, March, and April 2020). The Abhiyaan is premised on five pillars—economy infrastructure, system (based on 21st century techonlogy driven arrangements), vibrant demography, and demand.

It comprises the following five parts:

• Part 1 pertains to business including micro, small, and medium enterprises (MSMEs).
• Part 2 pertains to poor people, including migrants and farmers.
• Part 3 covers agriculture and allied sectors.
• Part 4 includes coal and mineral sectors, the defence sector, civil aviation, airports and aircraft maintenance, repair and overhaul (MRO), the power sector, social infrastructures, space, and atomic energy.
• Part 5 relates to government reforms and other provisions, including public health and education, and additional allocations to MGNREGS.

AtmaNirbar Package 1.0 or Stimulus 1.0 was announced by the union financce minister in five tranches or parts over five consecutive days (from May 13–May 17, 2020).

First tranche of the AtmaNirbhar Bharat package was announced on May 13, 2020. It focussed on micro, small, and medium enterprises (MSMEs)

• The MSME sector accounted for some one-third of the total manufacturing output in 2017–18 while its share in the total exports of the country was almost half of the total manufacturing output. The sector made around 30 per cent contribution to the GDP in 2015–17. When COVID-19 severely affected this sector, the government announced many measures in May 2020 to provide immediate relief to this sector.

An additional funding of ` 3 lakh crore was approved by the cabinet for eligible MSMEs and Micro Units Developments and Refinance Agency, Ltd. (MUDRA) borrowers under the Emergency Credit Line Guarantee Scheme. The National Credit Guarantee Trustee Company Limited is to provide 100 per cent guarantee coverage in the form of a Guaranteed Emergency Credit Line facility.

Under this scheme, collateral-free loans will be provided to MSMEs. MSMEs with an outstanding credit up to ` 25 crore and a turnover of up to ` 100 crore are eligible to borrow 20 per cent of their total pending credit. The government also agreed to provide ` 20,000 crore as subordinate debt for stressed MSMEs and to provide ` 50,000 crore as capital infusion into MSMEs.

In this regard, the Cabinet Committee on Economic Affairs approved a revision in the definition of MSMEs on June 1, 2020. With this, the investment limits with regard to MSMEs will be revised upwards and the annual turnover of the enterprises will be made an additional basis for the classification of MSMEs. As per the new definition, a unit having investment of up to ` 1 crore and a turnover of ` 5 crore will be classified as a micro unit; a unit with investment up to ` 10 crore and a turnover of ` 50 crore will be categorised as a small unit, and an enterprise having an investment up to ` 20 crore and a ` 100 crore turnover will be categorised as a medium unit.

This change is significant in the wake of the crisis in that it may lead to many enterprises which are currently classified as small enterprises to be reclassified as micro, and those classified as medium to be reclassified as small. Moreover, it may result in many enterprises which are not currently classified as MSMEs to be reclassified as MSMEs as per the new definition. Such enterprises will now become eligible to benefit from the schemes run by the Ministry of MSME. They can have access to flow of credit, support for technology upgrade and modernisation, entrepreneurship and skill development, and capacity-building.

• A special ` 30,000 crore liquidity scheme has also been approved for Non-Banking Finance Companies (NBFCs)/Housing Finance Companies (HFCs) under the AatmaNirbhar Bharat Abhiyaan.
• An amount of ` 90,000 crore was granted as liquidity infusion to DISCOMS against receivables guaranteed by the state government for discharging liabilities to power generating firms.

Second tranche announced on May 14, 2020, focuses on migrant workers, small farmers, and the poor.

• The union finance minister announced to provide free food grains to migrant workers who do not have a ration card for two months. Under One Nation, One Ration Card, national portability of ration cards can be used in any ration shops across the country. A scheme for Affordable Rental Housing Complexes for Migrant Workers and Urban Poor under Pradhan Mantri Pravasi Yojana (PMPY) was also launched. The Atma Nirbhar Bharat Abhiyann’s housing scheme is to use existing housing stock under the Jawaharlal Nehru National Urban Housing Mission (JnNURM) to set up new affordable units for rent while incentivising private and public agencies. Another measure undertaken during the pandemic was allocation of funds for the credit-linked subsidy scheme under Pradhan Mantri Awas Yojana (PMAY) for the middle income group.

– A special scheme for street vendors to avail ` 5,000 crore loan facility was announced under which provision of ` 10,000 of working capital was made.

– Extension of ` 300 crore additional capital emergency funds through NABARD for post-harvest rabi and kharif related activities for small and marginal farmers.

– Provision of ` 2 lakh crore of concessional credit to 2.5 crore farmers under the PM Kisan Credit Card.

Third tranche was announced on May 15, 2020 with the following provisions:

– Provision of ` 1 lakh crore fund for upgrading the farm gate infrastructure like cold chains, post-harvest storage infrastructures, etc.

– ` 10,000 crore fund for micro food scheme on cluster-based approach.

– Announcement to launch Pradhan Mantri Matsya Sampada Yojana for development of marine and inland fisheries, to increase fish production, and for employment creation.

– Allocations for dairy infrastructure, beekeeping, and Operation Greens were announced.

Reforms for the agriculture sector were also announced, which relate to:

– formulation of a central law to enable farmers to sell their produce at appropriate prices, barrier-free inter-state trade, and framework for e-trading of agricultural produce;

– amendment of the Essential Commodities Act, 1955 to ensure better price for agricultural produce like cereals, pulses, oilseeds, onions, and potatoes; and

– developing a favourable legal framework for contract farming, which enables direct dealing between farmers and large retailers, processors, and exporters.

The central government has signed a 500 million dollar agreement with Asian Infrastructure Investment Bank for providing COVID-19 support.

The aim is to strengthen public health system in India so as to tackle future disease outbreaks effectively. The implementing agencies of the project include National Health Mission, the National Centre for Disease Control, and the Indian Council of Medical Research.

Fourth tranche was announced on May 16, 2020 and included structural reforms in 8 critical sectors—coal, minerals, defence production, airports and air space management, MRO, power distribution of companies in UTs, space, and atomic energy.

– Commercial mining of coal was introduced on the basis of revenue sharing.

– It was also announced that coal bed methane will be auctioned.

– Tax regime for MRO ecosystem was rationalised. Under this regime, government aimed to increase the aircraft component repairs and airframe maintenance from ` 800 crore to ` 2000 crore in the next three years. It lowered the aircraft maintenance and increased revenues for air careers.

– Private sector investment in social infrstructure projects was boosted through revamped viability gap funding scheme of ` 8,100 crore.

– Private sector was allowed to participate in ISRO facilities and other relevant assets to improve their capacities.

– FDI limit in defence manufacturing under automatic route was raised from 49 per cent to 74 per cent.

– Power distribution companies in UTs are to be privatised as per the new tarrif policies.

Fifth Tranche On May 17, 2020, finance minister announced the fifth and final tranche of the ` 20,000 lakh crore financial package under the AtmaNirbharBharat package which was mainly oriented towards infrastructure, health care, public private collaboration, education and skilling, and urbanisation.

– Infectious disease hospitals and health labs to be set up in all districts at the block level.

– PM eVidya programme to be launched and digital education to be promoted.

– Covid-related debt excluded from definition of default under the insolvency and bankruptcy code. No fresh insolvency for the next year 2021.

– Decriminalisation of violations under most sections of the Companies Act.

– Companies allowed to list securities directly in foreign jurisdictions.

– New public sector policy was announced under which all sectors are open to the private sector and public sector enterprises to remain crucial in defined areas. In notified strategic areas, at least one PSE will remain but there will be private sector participation. PSEs will be privatised in other sectors.

– Borrowing limit of states was increased from 3 per cent to 5 per cent for financial year 2021.

AtmaNirbhar Package 2.0 or Stimulus 2.0

On October 12, 2020, the central government announced the second package of Rs 73,000 to stimulate demand in the economy. The measures announced under stimulus 2.0 were in continuation with the two stimulus packages announced on March 26, 2020 and May 17, 2020.

• Under stimulus 2.0, leave travel concession (LTC) cash voucher and festival advance schemes were announced to spur demand in the economy. The two schemes together were expected to create an additional demand of ` 36,000 crore in the economy by the end of the fiscal 2020–21.
• As per the scheme, central government employees who get LTC for their travels were given an equivalent of the amount even without travelling. The aim was to encourage them to spend more to boost demand. The allowance made under the scheme could be availed by the employees to make purchases of goods that attract 12 per cent or more GST and are worth three times the fare and equal to the cash encashment through digital mode only. The scheme would benefit around 3.5 million central government employees.
• The central government will make an additional budget outlay of ` 25,000 crore for roads, infrastructure, urban development, and water supplies, etc. The budget of ` 25,000 crore is over and above ` 4.13 lakh crore capex budgeted for financial year 2021. It was also announced that ` 12,000 crore interest-free loans would be provided to states for making capex or capital expenditures, which are funds utilised for maintaing physical or fixed assets like buildings, equipment, etc.

RBI Report on Impact of COVID-19 on States

As per an RBI report titled ‘State Finances’, released in October 2020, the gross fiscal deficits (GFDs) of state governments are likely to double in 2020–21. In this period, most of the states budgeted the GDF-to-GSDP (gross state domestic product) ratio at or above the 3 per cent threshold. But the remaining states that budgeted the GDF-to-GSDP ratio after the pandemic hit, placed it at much above the 3 per cent threshold. This fiscal deficit has been attributed to a ‘scissors effect’ causing loss of revenues due to demand slow-down, coupled with higher expenditure in response to COVID-19 pandemic. (The ‘seissors effect’ is what takes place when revenues and expenses move in different or diverging directions. The effect accounts for trends in profits.) The stress on state finances would increase as the lockdowns extend new waves of infection spread. As per the report, the next few years will be quite testing for the states.

Tax revenues fall faster than GDP when growth is negative; so tax revenues may well be low in the coming years. States would have to spend more on health and support measures, which means expenditure would increase for states, and so the ‘scissors effect’ would be prolonged. The increase in contingent liabilities (guarantees) would affect the fiscal position of states. So, states may have to delay investment projects. If there is no growth acceleration, fiscal sustainability will be badly hit.

In the report, the RBI appreciates the Kerala Model and Dharavi Model for their response in times of crisis. In Kerala, empowered local governance institutions and community participation helped in effectively dealing with the crisis as they reached out to affected people. The state successfully contained the first wave of infection with the help of local self-governments. However, lately there has been a surge in the number of infected people in the state due to the arrival of non-resident Keralities from other states and easing of restrictions.

In Dharavi, public-private partnership and community participation effectively checked the spread of the pandemic. The example of Dharavi for flattening the curve was also appreciated by the WHO.

The government tied up with local private doctors, hospitals NGOs, volunteers, elected representatives, and civil society organisations, along with following a rapid action plan, including accessible testing, screening, early detection, contact tracing, timely isolation, institutional quarantine (where required). The collective action helped to combat the spread of COVID-19.

AtmaNirbhar Package 3.0 or Stimulus 3.0

On November 12, 2020, the central government announced a fresh set of measures—Atmanirbhar 3.0 stimulus package—to boost economy by job creation and providing liquidity support to sectors affected due to the pandenic. AtmaNirbhar 3.0 entails a package of ` 2.65 lakh crore with an additional outlay of ` 10,000 crore for PM Garib Kalyan Yojana and an additional outlay of ` 65,000 crore as fertiliser subsidy.

The set of measures announced by the union finance minister under AtmaNirbhar 3.0 include extending the Emergency Credit Line Guarantee Scheme (ECLGS) to 26 stressed sectors, additional funding for housing and infrastructure sector, job creation and additional funding for rural employment, and changes in tax laws to facilitate clearance of unsold inventory in the housing sector. Besides, a new scheme for job creation has been announced.

With this package, the quantum of total stimulus announed by the government stood at ` 29,87,641 crore, including the monetary measures taken by the RBI.

There is also an additional outlay for rural employment. It also introduces changes in tax law to help clearance of unsold inventory of residential housing units.

Measures Announced for Stressed Sectors

• Under the stimulus 3.0, stressed sectors have been provided funding support through a second version of ECLGS scheme. ECLGS forms a major component of the ` 20 lack economic stimulus package under the AtmaNirbhar Bharat Abhiyaan.
• The details regarding the 26 sectors as outlined by the Kamath Report were not immediately available, a formal notification in this regard is expected to be issued soon.

Kamath Report

The RBI, in August 2020, announced the formation of a five member expert committee under teh chairmenship of K.V. Kamath, former CEO of ICICI Bank to suggest recommendations on the financial parameters to be considered in the restructuring of loans affected by the COVID-19 pandemic. The expert committee report was released on September 7, 2020 by the RBI. The report has listed specific financial parameters for 26 sectors, including auto, aviation, construction, hospitality, power, real estate and tourism, among other that can be included in by lenders while finalising resoution plan for borrowers. The commisttee has recommended financial ratios for 26 sectors.

• As per the report of the Kamath Committee, companies in sectors like retail trade, wholesale trade, roads and textiles were under stress. It also stated that sectors including NBFCs, power, steel, real estate, and construction, have been under stress pre-COVID.
• The committee further observed that corporate sector debt at ` 15.52 lakh crore had come under stress after the emergence of COVID-19 in India, while another ` 22.20 lakh crore had already come under stress by that time.
• The stressed sectors, including construction, trade, hotels, and transport had a contribution of 83.4 per cent to the contraction in the services sector in April–June quarter. As such, supporting them forms a crucial part of the stimulus package. The support to these sectors is within the ` 3 lakh crore loan sanction limit set under the scheme, but the limit could be enhanced as per the requirement. An additional credit of 20 per cent outstanding will be given to companies with loan dues up to 30 days (Special Mention Accounts or SMA) as on February 29, 2020. As per the government data, the (ECLGS) scheme had made disbursals of ` 1.48 lakh crore against sanctions of ` 2.03 lakh crore to 60.67 lakh borrowers.
• The additional credit under the scheme will have a tenor of five years, including one year of moratorium on principal repayment, and the scheme will remain operational till March 31, 2021. These measures are expected to give a major boost to companies which face stress due to shortage of funds.
• Under the scheme, entities in 26 stressed sectors, identified by the Kamath Committee, and also the healthcare sector, with credit outstanding of above ` 50 crore and up to ` 500 crore as on February 29, 2020 are eligible to avail the benefits.

Employment Creation: An employment incentive scheme, AtmaNirbhar Bharat Rozgar Yojana has been announced under the AtmaNirbhar 3.0 stimulus package. It entails the provision of a subsidy for provident fund contribution for hiring new employees in EPFO registered establishments on monthly wages less than ` 15,000. The government will provide the subsidy for two categories of workers—workers who lost then jobs between March 1 and September 30 and new employees, who joined on or after October 1.

• The subsidy in case of establishments employing up to 1000 employees will be employees’ contribution (12 per cent of wages) and employer’s contribution (12 per cent of wages). Establishments with more than 1,000 employees will get only employee’s EPF contribution. The subsidy of eligible new employees will be credited in Aadhaar-seeded EPFO Account (UAN).
• As per the scheme, establishments where there are 50 or less employees, subsidy will be provided for employment of two new employees and for establishments with more than 50 employees, subsidy will be provided for five new employees.
• According to the union finance minister, the scheme will cover 99.1 per cent of the establishments and 65 per cent of all employees in the formal sector in the first category in which EPF contributions will be provided by government through subsidy support.
• The scheme is similar to Pradhan Mantri Rozgar Protsahan Yojana which was announced in August 2016 and implemented up to March 2019. Under it, the government provided full employer’s contribution of 12 per cent EPF and employees’ pension scheme for a period of three years for new employees covered under the EPFO on or after April 1, 2016 having a monthly salary up to ` 15,000.
• The scheme would lead to employment creation and formalisation in the economy and thus would spur demand.
• Experts feel that the scheme will have a positive impact, but it will have limited scope as it does not provide direct wage support but through EPF route. It is, however, likely to create low-skilled and low paying jobs and, as such, the incomes from these jobs will have limited multiplier effect on the economy.
• In addition to this scheme, the government announced an additional outlay of ` 10,000 crore for employment under the previously announced scheme—Pradhan Mantri Garib Kalyan Rozgar Yojana. In this regard, 116 districts across six states where at least 25,000 migrant workers returned in each district were identified with the aim of providing employment to these people for 125 days. For this, about 25 schemes were brought together.

Housing and Infrastructure Sectors

An additional outlay of ` 18,000 crore has been provided under Pradhan Mantri Awas Yojana (PMAY-U)–Urban for building 12 lakh housing and completion of 18 lakh houses.

• The scheme has the potential to work as a jobs programme for the workforce that left cities due to lockdown. A combination of PM Garib Kalyan Rozgar Yojana and the MNREGS along with the creation of rural infrastructure and urban housing can lift demand from the bottom.
• The government has also provided tax relief to home buyers as well as realty developers by increasing the differential between circle rates and the agreement value of a residential property of up to ` 2 crore from 10 per cent to 20 per cent under section 43CA of the Income Tax Act. This will be applicable till June 30, 2021. It will facilitate the clearance of stuck properties and would also enable developers to fulfil existing offers and discounts with respect to unsold inventory without paying penalty. Earlier, there was an additional tax burden for any deal with value lower than the set limit for both buyers and developers.

The move will spur demand in affordable and mid-segments, and can help revival of core-sector as per view of the analysts.

• An equity of ` 6,000 crore in the National Investment and Infrastructure Fund (NIIF) has also been announced to support debt financing totalling ` 1.1 lakh crore by 2025 which will boost infrastructure financing. NIIF strategic opportunities fund has established a debt platform, comprising an NBFC Infra Debt Fund and an NBFC Infra finance company comprising a total loan book of ` 18,000 crore and a deal pipeline of ` 10,000 crore.

Agriculture Sector

There is an additional outlay of ` 65,000 crore in the package as a fertiliser subsidy to provide support in the wake of increasing demand due to a good monsoon and increase in the crop-sown area. This subsidy is over and above the ` 71,309 crore, already allocated in the Union Budget for 2020–21.

• The allocation of ` 65,000 crore is significant as it will do away with all outstanding due to the fertiliser industry. Farmers get subsidy at maximum retail prices (MRPs) which is below the cost required to produce or import fertilisers. The difference is borne by the central government as subsidy payable to the manufacturers or importers. In all fertilisers, except urea, the subsidy is fixed and the MRPs are decontrolled.

Other Announcements

The package also includes ` 10,200 crore additional budget stimulus for capital and industrial expenditure on domestic defence equipment, industrial infrastructure, and green energy. There is also an outlay of ` 900 crore to the department of Biotechnology for research and development of an Indian Vaccine for Covid.