How much success did the Modi government get in making a self-reliant India?

Posted on 10th Jun 2021 by rohit kumar

During the parade on 26 January this year, the Department of Biotechnology in its tableau on the Rajpath showed the vaccine development process of Covid-19 under the 'Self-reliant India' campaign.

 

The next day, newspapers wrote that "one of the extraordinary successes of the Total Self-reliant India campaign is the large-scale manufacturing of vaccines in India".

 

Now we are in June but despite the claim of being self-sufficient in the vaccine, there is a shortage of vaccines in the country and efforts are on to import them.

 

Even if India is self-sufficient in making vaccines, it has not been made today, years ago, India has been considered a global factory of making vaccines. Critics blame the Modi government's mismanagement for the vaccine shortage that is visible today.

 

Covid, Galvan, and call for self-reliance

The Prime Minister had given the slogan of 'Self-reliant India' on May 12 last year to deal with the epidemic. In that day's speech, he used 'self-reliance' seven times and 'self-reliant India' 26 times. The economic package of 20 lakh crores was named the 'self-reliance package'. Since then the word self-reliance has been used so much that Oxford University Press has declared it the word of the year 2020.

 

However, this slogan of the Prime Minister became a social media campaign. From ministers, state governments, officers, and industrialists to common citizens, they spoke loudly about self-reliance.

 

The military skirmishes with China in the Galwan Valley in June last year not only added to the word but also added a sense of patriotism, with the Indian government banning many Chinese apps and reducing dependence on Chinese imports. To start raising the slogan of self-reliance even more.

 

How self-sufficient has the country become after more than a year? Nilesh Shah, one of the Prime Minister's advisors on economic matters, says that self-reliance is not a new concept in India. Shah is also the CEO and Managing Director of Kotak Mahindra Asset Management.

 

In an exclusive conversation with BBC, he says, "Self-reliance is not a new word. After independence, we used to import milk for many years, and then Amul became a part of a self-reliant India. Today we have become the world's largest milk producer. So just like we have to become self-reliant in milk through Amul, in food grains through Green Revolution, in medicines due to the private sector, we have to become self-reliant in the field of manufacturing and defense. This is a journey, not a destination. This year if you are the largest producer of milk, then you have to remain there for the next year also."

 

Dr. Faisal Ahmed, a specialist in Chinese affairs at the Four School of Management in Delhi, says, "Successive five-year plans have talked about self-reliance. Self-reliance has been talked about in defense, agriculture, and milk, but the emphasis on self-reliance has been given. The reason is due to the disruptions in the supply chain due to the lockdown in the pandemic. During the Corona lockdown, the idea came to the fore that the production capacity should be increased within the country so that it could meet the challenges ahead.

 

Some experts believe that self-reliance is a Covid-induced global trend. Speaking to the BBC, Chinese writer Sun Xi in Singapore said that India is not the only country to give the slogan of self-reliance due to the epidemic.

 

He says, “Before this crisis globalization was a general trend, everyone thought that this is a global world so we should increase trade agreements, but due to the Covid crisis, most countries felt that self-reliance is also necessary. I think there is strength in this policy of PM Modi."

 

But according to him, India is not ready for self-reliance, "China can produce most of the goods it needs, but India's domestic demand is very high, India cannot produce a large part of the product it needs. It has taken many decades for China to reach here. India will not be able to become self-reliant overnight."

 

Interestingly, China was also a part of this global trend, despite China producing almost everything itself and being the world's largest exporter.

 

Doctor Faisal Ahmed, an expert on Chinese affairs, says that earlier China's priority was to promote exports, but from last year there was some change.

 

He says, “President Xi Jinping came out with a policy in May last year which he named Dual Circulation. He said that we will now focus not only on external circulation (export) but also on internal circulation (domestic market). This internal circulation is in a way China's policy of self-reliance.

 

Trying to reduce dependence on Chinese imports

The spirit of nationalism gained momentum after the clashes in the Galwan Valley. Statements against China started coming daily in the media. There were reports from many places that people set fire to Chinese goods and raised slogans to boycott them.

 

The government imposed many restrictions on Chinese investment. And also more than 200 Chinese apps were banned. It seemed that India's self-reliance campaign was only against Chinese imports.

 

trade with china

After a year, now the question is how much dependence on China has decreased? The reality is that imports from all countries have reduced significantly but not from China.

 

In the year 2019-20, India's total imports from different countries of the world were $ 474.7 billion, which came down to about $ 345 billion in 2020-21.

 

In the year 2019-20, the number of sugar imports was slightly more than $ 65 billion, which was slightly more than $ 58 billion in 2020-21. Sugar imports decreased marginally in terms of amount, while it increased as a percentage of total imports. The share of Chinese imports in total imports increased from 13.7 percent to 16.9 percent this year.

 

India reduced exports as well as imports. Exports were more than $313 billion in 2019-20, which declined to less than $256 billion in 2020-21. Indian exports to China were a little over $16 billion in 2019-20, which increased to a little over $18 billion in 2020-21. This slightly reduces the trade deficit with China which has been a matter of concern for India.

 

Imports from China have now become expensive, yet it does not appear to be decreasing. Rajiv Chadha has been importing motor parts from China for years in Delhi's Karol Bagh area.

 

He says, "Chinese exporters have increased the prices of goods by 20 to 40 percent. Their government has put strictures on the goods sent to India. On the other hand, the release of Chinese goods in Indian ports has taken a long time since last year Looks like we are having a lot of problems.

 

Professor Huang Yunsong, associate dean of the Sichuan University School of International Studies in China, is in favor of two-way trade between India and China and further Chinese investment in India, but he also advises caution.

 

Talking to the BBC, he says, "We take this as a good sign to resume bilateral relations, but with a lot of precaution."

 

Overall, India has achieved remarkable self-reliance in a year in areas like medical equipment. For example, take PPE kits, when the lockdown was imposed in March last year, PPE was made in India with little to no. Today more than four and a half lakh PPE kits are being made every day.

 

pharmaceutical and defense

India has now become a major exporter of PPE kits. The same is true of masks. There were very few companies in India manufacturing ventilators. Now there are many. From independence till the epidemic, only 16,000 ventilators were made in the country, but according to government data, a year after the epidemic, more than 58,000 ventilators were made in the country. It is another matter that complaints of deficiencies have also come from many hospitals.

 

Apart from this, 62 percent of the raw material had to be imported from China to make many types of medicines. Now the dependence on raw materials has reduced. It is another matter that the cost of these raw materials in India is more than in China.

 

There has been a lot of emphasis on making India self-reliant in the defense sector. Finance Minister Nirmala Sitharaman emphasized this in the last two budgets, but no significant success has been achieved so far.

 

Nilesh Shah says, "Technology changes very fast in the defense sector. And that technology is not always available. It is not necessary that the defense sector was in the public sector, now slowly it is coming in the private sector. Immediately in every sector. It is not necessary to get results. First, the foundation has to be laid, it has to be strengthened, then the building is built.

 

To make India self-reliant in production and increase exports, the Modi government has started the 'Production Linked Incentive Scheme' or PLI scheme in April 2020. Under this, the government is giving substantial exemption in tax and excise duty to companies in 13 sectors like electronics, mobile phones, air conditioning.

 

Its benefits will be visible in the next few years, according to Nilesh Shah it will increase the GDP but is the import harmful to the economy?

 

The world's big exporting countries are also big importers. The US, the European Union, and Japan are examples of this. One of the objectives of PM Modi's campaign of self-reliance was to reduce imports to a great extent. To achieve this objective, the central government has increased tariffs on the import of many items.

 

Adviser to the Prime Minister on Economic Affairs Nilesh Shah justifies this, saying, "Usually you import raw materials at a cheaper price and increase their value and export them at a higher price. But in India, we have seen that the import of finished goods is cheap. and import of raw materials at expensive prices. It was necessary to rectify this and for this, the government has taken many steps.Second, we saw that the countries of South-East Asia were giving various types of discounts to their producers "

 

He explains, “Just like you plant a plant, you fence it back and forth so that the plant can grow. When it becomes a tree, it does not need a fence. So like you take care of the plant for some time. In the same way, it is important to take care of your industry for some time.

 

But imports are not a bad thing in Singapore, according to Chinese writer Sun Xi, "You don't try to make something you are not capable of. You buy those goods from a country that can make cheaper and better quality than you, so there are two countries. between import-export trade agreements.