Challenges to Atma Nirbhar Bharat

Context: Making India   self-reliant India or Atmanirbhar Bharat

What are the current economic challenges faced by India?

• The supply chain disruption due to national and localised lockdowns has led to supply side and demand side contraction.
• Slowdown of aggregate demand due to low, private final consumption expenditure (PFCE), investment and exports.
• Even, the consumption demand of the rest of the demography from agriculture, small-scale manufacturing and self-employed is stagnant due to low income growth.
• The investment slowdown is affecting industries like steel, cement and power and income, employment and demand.
• Along with these constraints, India has huge developmental implications on poverty, inequality and standard of living.

What are advantages for India in present labour market?

• All other manufacturing giants are ageing: For example, Japan, EU, the US, South Korea and China. Ageing population has forced them to move out of low-end labor-intensive manufacturing.
• China’s lost advantage: Due to a rise in wages, strict environmental regulations and an increase in the cost of production along with the uncertainties due to China’s friction with the US and other countries.

How to ensure Atmanirbhar Bharat?

• Incentivising the farming community: Need to shift from grain-based farming to cash crops, horticulture and livestock products. For example, the Chinese experience in the late 1970s has shown that reforms in agriculture increased rural income, leading to demand for labor-intensive industrial goods.
• Exploiting the demographic dividend: India has around 900 million people in the working-age population with an average age of 27.
• Shift the labour force from agriculture to manufacturing: For this, labour-intensive manufacturing should be promoted that can generate employment opportunities for labour force with low or little skills, along with income and demand.
• Create a competitive manufacturing sector: Need to aggressively reduce both tariffs and non-tariff barriers on imports of inputs and intermediate products that will create a competitive manufacturing sector for Make in India, and “Assembly in India”.
• Ensure free flow of Investments: Attracting multinational enterprises and foreign investors in labour-intensive manufacturing will facilitate R&D, branding, exports, etc.
• Market reforms: By rationalizing punitive land acquisition clauses and rationalizing labour laws, both at the Centre and state level.
• Human capital development: Need for large-scale vocational training from the secondary-school level, like China and other east and south-east Asian countries.

The COVID-triggered economic crisis can be an opportunity for India if we create a development model that brings opportunities for the people at the bottom of the pyramid. A competitive and open economy can ensure Atmanirbhar Bharat