Toward Swa-Raj

Context – Atmanirbhar Bharat Abhiyan (ANBA) should look beyond economic reforms and aim for structural overhaul of the system. As ANBA will be important move in meeting Gandhiji’s vision of individual self-reliance and recognising poverty as the worst form of violence.

Background

• Collective political Swaraj hasn’t always translated into individual economic Swa-Raj because of inadequate formalisation, industrialisation, urbanisation, financialization, and skilling.
• India will become 3rd largest economy in the world in next five years bypassing Germany and Japan, but 138 countries are ahead of us in terms of per capita GDP.

ANBA: Avoids unemployment becoming hunger and illiquidity becoming insolvency

• Agriculture package of 1.63 lakh crore: includes farm-gate and aggregation point infrastructure, fisheries, animal husbandries, animal vaccination, micro food enterprises.

• Reform to the Essential Commodities Act, APMCs and contract farming: directly impact prosperity

• Non-bank liquidity package of Rs 5.94 lakh crore: includes MSMEs, NBFCs, MFIs, housing finance companies, power DISCOMs.
• Migrant and farmer package of Rs 3.16 lakh crore: includes concessional credit via Kisan credit card, farmer working capital, affordable housing.
• Welfare and Health package of Rs 1.85 lakh crore: includes women and pensioner benefits, MNREGA, emergency health response.
• RBI’s liquidity measures of Rs 5.24 lakh crore: includes two phases of targeted long-term repo operations, CRR cut, marginal standing facility limit increase, refinancing facilities, and mutual fund special liquidity facility.

ANBA, what it is not

• It is not a fiscal bonfire: as it marginally raises our already difficult fiscal deficit.

• It is not an institutional assault: as RBI’s role in ANBA keeps it away from the political minefield.

• It is not shutting off India from the world: as it creates new openness to ideas, investment, and trade.

Next Step – ANBA 2.0

• Civil service reform: the steel frame has become a steel cage.
• Government reform: Delhi does not need 57 ministries and 250 people with Secretary rank.
• Financial reform: sustainably raising credit to GDP ratio from 50% to 100 %.
• Urban reform: Having 100 cities with more than a million people rather than 52.
• Education reform: Current regulator confuses university buildings with building universities.
• Skill reform: Apprentice regulations are holding back employers and universities.
• Labour reform: Capital is handicapped without labour and labour is handicapped without capital.

Welfare - India and rest of the world

• Scandinavian countries spend 37% of GDP in welfare measures against 14% by India.
• New York - it’s GDP equals Russia with 6% of the people and 0.00005% of the land, companies (the $4.5 trillion revenue of its 25 largest companies is more than Germany’s GDP), and citizens (per capita income of $55,000).

Way Forward 

• The reforms are signs of removal of regulatory cholesterol which hindered the translation of economic complexity into economic prosperity
• India should utilise this opportunity to achieve economic freedom with economic tryst with destiny.