Atma Nirbhar Bharat Abhiyan 3.0

Indian economy before the pandemic induced shock was already under stress. The economic activities were de-accelerating and the financial sector was struggling to get back into the shape. The previous doses of stimulus have helped the supply and demand side of the economy to a huge extent. As a result there is growth in the economic activities across all the spectrums. Different indicators such as e-way bills, PMI and credit growth are improving.

The government is investing in every possible initiative that can support the economy to recover from the coronavirus induced pandemic shock and accelerate economic activities. To achieve this purpose, it is using a combined strategy of fiscal, monetary and liquidity measures. The first dose of the economic stimulus primarily focused on supporting the supply side of the economy followed by the RBI’s moves to make money cheaper and the second dose of the stimulus focused on the demand side. The government has announced the third dose of economic stimulus focusing on both the demand and supply side.

Considering different provisions made in the Atma Nirbhar Bharat Abhiyan 3.0, it may be considered to be a good effort but is full of its own risks. It is expected to increase demand in the economy and create jobs but some measures of the stimulus may prove to be counter-productive. The extension of the existing emergency credit line guarantee scheme (ECLGS) till March 2021 and the announcement of a new scheme for 26 sectors is expected to make a hole in the balance sheets of banking and financial institutions. This will further increase the size of NPAs for the whole banking sector and needs to be addressed.

Rajeev Upadhyay

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