While Prime Minister Narendra Modi’s Atmanirbhar Bharat Abhiyan aims at making India self-reliant in trade and businesses, it has many downside risks too. In trying to achieve economic and security goals, the policy has a conflicting dynamic, The Economist Intelligence Unit said in a research report. For example, the report said, Modi’s policy aims to reduce domestic market access to imports, but at the same time open the economy and export to the rest of the world. There will be a more sustained and overt push towards protecting domestic industries under the self-reliance initiative, echoing India’s pre-liberalisation stance before 1991, the report added.
Such a stance may have a recoil effect on India’s foreign trade too. The EIU said that a more protectionist trade stance and any increase in tariff rates for imports may lead to punitive tariffs or the revocation of trade benefits from its partners. One such incident was seen when the US revoked India’s access to its market under the generalised system of preferences (GSP), citing high Indian import tariffs.
Self-reliance, or self goal?
Further, Narendra Modi’s self-reliance push may eventually hurt his own reforms agenda. The possibility that the government may not follow through on the broader reform agenda while raising tariff and implementing non-tariff barriers, is believed to be another risk with the self-reliance initiative, the report said. If the government does not undertake the opening of various sectors to private enterprises, ease overbearing regulation, and privatise loss-making PSUs, India’s manufacturing sector will become further uncompetitive. Also, this would make future governments averse to opening up the economy again, it said.
Source: Financial Express
