TOWARDS SELF-RELIANCE

After the clarion call for self-reliance by the prime minister in his third national address during these testing times, India enters a deliberative yet action-oriented stage as far as economic reforms are concerned. PM’S speech had a quantitative aspect in the fiscal stimulus package worth Rs 20 lakh crore or 10 per cent of India’s GDP and a qualitative aspect of a self-reliant economic outlook. While the emergency package is likely to garner attention owing to pandemic-induced exigencies, the policy of self-reliance is the one that will be played out in future years as India overcomes Covid-19. The quantitative aspect i.e., the fiscal stimulus will do well for injecting liquidity in the economy. A quantum jump in the definition of MSMES will likely see the sector grow and emerge as a vibrant contributor to PM’S self-reliance outlook. The demand for revising its definition has been long overdue. Though it still requires a legal amendment to be brought into effect, the pandemic has facilitated its adoption in the larger economic interest. The Union’s 100 per cent sovereign credit guarantee will motivate the reluctant lenders to support the cash-strapped borrowers. MSME produce over 30 per cent of India’s GDP and contribute to over 45 per cent of India’s total exports besides providing employment and entrepreneurship opportunities to weaker sections of society. Therefore, supporting the MSME sector through fiscal stimulus would be a widely lauded decision. The new definition would likely facilitate the growth of MSMES that have also been reluctant to cross the threshold definition of MSME fearing loss of entitled benefits. Further, the government has earmarked tenders up to 200 crores specifically for Indian companies, barring global giants’ participation. This, in turn, provides impetus to MSMES and other Indian companies to grab government tenders and build competency to match global giants. It may also be perceived as the first step in raising global popularity. The supportive hand of the government would be expected to allow the economy to gain momentum and script a revival of the lost high-growth trajectory. There may still be a lot of hiccups in the process but the government’s backing indeed helps in restoring confidence. More importantly, a revived economy, even with low growth during these grim times, would allow the national conscience to implement PM’S qualitative aspect: the long term economic outlook of a self-reliant India.

While the contours of what the PM meant by a selfreliant India will be defined in the times to come, a mere layman inference points to the country’s capacity to fulfil its most basic needs by itself. Having said that, a strict criticism may arise as to how India will ever be self-reliant when it comes to oil. Our dependency on OPEC and its oligopolistic regime cannot be ignored given India’s over 80 per cent crude requirement is fulfilled via imports. But to counter that, our focus on products that we hold a competitive advantage in can be substantially increased to a point where our exports cross unprecedented thresholds. India may not have oil reserves to the tune of what OPEC has. However, that does not mean India does not hold a competitive advantage in anything. As mentioned by PM himself, our Khadi industry has grown substantially. Similarly, there are a number of products unique to India wherein our local brands can build global competitiveness. PM’S call for self-reliance does not mean visiting the pre-1991 India with a relatively closed economy. LPG reforms happened for good and contemporary times require India to take the intelligent step forward. Our MSMES and our unique products should grow to compete at global levels, rapidly increasing our exports. Our appetite for renewable energy resources must expand. A self-reliant India would also require investment in skill development and education to tap the unparalleled strength of our demographic dividend. Global competitiveness of our local brands and a high human capital collectively contributing to high net exports is a self-reliant India we should look forward to!