Globalisation and Atamnirbhar Bharat:- Issues and Challenges

Introduction

Economy is the driving engine of the society, and if we observe closely the health of economy
post 2014 general election, it has faced a steady decline and major policy jolts like
Demonetization. If we observe the economic history of India, we started with Socialistic
objective of USSR soon to realize that, in long run socialistic policies slows down growth rate,
and government machinery is overloaded and negligent towards competitive innovation in the
world. At this time when one of the most affluent countries like USA and UK are rethinking
capitalism and realizing that the economic disparities created by crony capitalism infuriates
masses, it is a critical time for India to take responsible actions for its future and its international
economic standing. India stands today as world’s youngest nation for a whooping 136.64 crore
population to skill, employ, train, invest and manage. At this juncture our share of challenges
can’t be looked in isolation from a fast globalizing world.

China vs India :- The New Era Civilization States and Future Competitors

The trade between India and China is falling almost 12.4% year on year and to USD 12 billion in
the first two months. The declining trade was largely due to the slowdown of the economies of
the two countries. As a result of lockdown Indian pharma industry is concerned as India, is a big
importer of the main raw materials APIs (Active pharmaceutical ingredients) from China.

There is a large no of Chinese investments in Indian start-ups like- Zomato, Swiggy, Ola, Big
basket, Udaan, Policy Bazaar etc. In 2018, Alibaba invested $216million in online grocer
BigBasket, $21million in food delivery app Zomato. Tencent has $400million on Ola and huge
amount invested in Paytm and Byzu’s, an education start-up. Two-third of Indian start - ups
valued at $1 billion according to the data from think - tank Gateway house. It is not much
harmful to the country if the percentage of Chinese investment is lower. But if the percentage
goes upto 40% like in case of paytm then we should not use it. Also, it is dangerous if the
percentage of Chinese share becomes more than 50% as with this the Chinese companies get
decision making power.
India’s leading multinational engineering, construction, technology and financial services
conglomerate L&T (Larsen & Toubro) committed to reduce dependency on Chinese products
.L&T CEO, Shri SN Subrahmanyam said that they firmly stand with the policy of ‘Make in
India’ to develop local manufacturing and construct ecosystem in producing efficient and cost
effective substitutes for the global markets. Company plays a significant role in producing key
engineering and technological products and construct almost all nuclear reactors for power
generation over eight decades

In this background Indian Economy needs to focus on its challenges and objectively analyze it’s
policy decisions to face the global market.

Following thesis aims to explore the idea of Atamnirbhar Bharat, and it’s 5 pillars namely
Economy, Infrastructure, System, Demography and Demand.

Research Objectives

The main objectives of the present research work are as follows

- To analyze carefully through history the lessons from socialism and measures to
avoid exploitation through Capitalism
- To identify Core areas of focus where Leading market positions can be acquired
- To learn from examples of other countries how they developed their strategic sectors.
- To analyze Legislative Solutions like IBC, GST etc to improve Ease of doing
Business

Hypothesis

India can no longer play coy to the world economic competition since if we don’t scale up our
economic pie, we would be a dumping market to countries like China and US. For this leaving
the old concept of socialistic society, where essentially State having nationalized major sectors
was running crucial institutions like Air India, Food Corporation of India etc in debts must
disinvest strategically and employ measures to facilitate reviving animal spirits in market so that
the size of the economy can be expanded and we can break the cycle of equally distributing
poverty of socialism.
Research Design

There are three parts of research design as stated below:

1. Nature of the Research Selection of adequate Research Method

Numbers of methods are used to conduct the research as per the requirement of researcher and the
concern is of research. There are often two research approaches being used namely Doctrinal and Non
Doctrinal. For the analysis of the concept of Atamnirbhar Bharat and the pressing challenges faced by
India in relation to a competitive Globalised world, our Socialist history and impact of recent decisions of
disinvestment doctrinal method is used.

2. Sources & Type of Data

It involves collection of data from primary sources which include Reports Insolvency and Bankruptcy
Code 2016, Constitution of India, Reports from Ministries, recommending Nationalization Banks, Coal,
Air Travel, Agriculture etc, various Judicial decisions and secondary sources which include books,
commentaries, legal periodicals, research papers, journals, scholarly articles, online legal databases,
online journals and internet sources.

3 Method of Data Collecting

This research work is purely based on traditional method.

Scope and Limitation

The scope of this study can be well defined by considering the following limitations:

1. The proposed research work has mostly confined within the policy and legal regime of
Economic Decisions with respect to few focus sectors.
2. It is purely an analytical work in nature.
3. This research being a Doctrinal and Empirical type of research has not required collection of
any field data or sampling, etc. However, for analytical study and critical appreciation of
economic policies, have been made from the data available from various secondary sources,
like reports, case studies, articles, research papers, etc
 Rough Chapterisation

A) History and Framework of Indian Economy

1. 30 years of Socialism
2. Disinvestment Era
- Libralisation, Privatisation and Globalisation
3. Moving from Socialism to Capitalism (Global lessons)
4. Self-sufficiency vs Globalisation (Import Substitution (Deep Socialist, protectionist
mindset))

B) Core Focus Areas for Atamnirbharta

 Pharma
-Dependency of Raw Material Imports
 Defence
-Lessons from China
 MSME’s
-Improving startup culture, banking relationships, Make in India initiative.
 Agriculture
-How India can become a world leader in exports of exquisite, organic farm products

C) Budget 2021

 An Analysis of Previous year Budgets of Modi Government Regime and what has starkly
changed in Budget 2021
 Analysis of Impact of Budget 2021 on India’s Securities Market.

D) Structural Changes
 IBC
 GST
 Agriculture
 Infrastructure Push
 The Challenge of Information Capitalism
 Chapter 1:- History and Framework of Indian Economy

Topic

1.1 30 Years Of Socialism

India got its independence from British Raj on 15 th Aug 1947. The Republic of India is governed
as per the constitution of India, passed by the constituent Assembly which drafted the
constitution on 26th Nov 1949 and came into force on 26 th Jan 1950. After Independence, India’s
economy was in a very poor state. India went ahead with a socialistic approach under the
leadership of 1st prime minister Pt. Jawahar Lal Nehru. On 15 th march 1950, the planning
commission was constituted, today the very same body has been renamed as Neeti Aayog. It was
the Planning Commission that developed, executed and monitored the 5yr plans.
After Independence the Indian Economy was planned with every 5 yr basis with certain goals
and objectives. The concept of 5 yr plan was 1 st implemented in the Soviet Union in 1928 by
Joseph Stalin. Jawaharlal Nehru was inspired by Stalin’s plan. The full form of USSR, it is the
Union of Soviet Socialist Republics. Officially the USSR was a fedral socialist state, PM J.L
Nehru was inspired from it, and that is how after Independence, India’s development stategy
began on a socialistic approach.

In January 1951, Indian Railways was formed, under Ministry of Railways, as an organization,
after it was nationalized. Before 1951, the Railways functioned as different companies like, The
Great India Peninsula Railway, Bengal Railway, Bombay Baroda and Central India Railway,
Eastern Railway, Madras and Sourthern Maratha Railway etc. They were partly owned by the
government and also by the states, and then there were a few in Private hands. However GOI
took the decision in 1950, to bring all the railways, under full Government Control, mainly for
better co-ordination in expansion activities which were to follow in expansion activities of the
country, that’s how in January 1951, Indian Railway was officially Nationalised.
PM J.L Nehru, presented the 1 st 5 yr plan to Parliament of India, on Dec 8 1951, where he
wanted an active role of Govt in all Economic Sectors. Before the 1 st 5yr development plan, The
Industries (Development & Regulation) Act on 31st Oct 1951. The Central government
announced its industrial policy, way back on 6th April 1948, but it was passed by both the houses
of Parliament and then approved by the president, on 31 st Oct 1951. With the help of this
Industrial Policy, the Central Govt was able to develop, certain number of Important Industries,
which affects the country’s Economy as a whole. With this law the Central Government got
more power to regulate big industries. This was also an early warning sign of ongoing License
Permit Raj. The License Raj was an elaborate system of Licences, and regulations that was
required to set up and run business in India between 1947 and 1990. The Idea of Nationalizing
high profile companies started under Nehru Era, with Air India being taken over in 1953 and life
Insurance in 1956. JRD Tata was against Nehru’s Idea of Nationalisation. Air India was founded
by 1932 by TATA Group, In 1953 GOI Nationalised all Air Transports by passing the Air
Corporation Act 1953. Government gave compensation to the companies after getting
Nationalised.

In 1954 Hindustan Steel was created by the government, which was initially designed to manage
only one plant that was coming up at Rourkela, thereafter the control of more and more steel
plants was transferred to Hindustan Steel, and finally in 1973 Steel Authority of India was
incorporated. Similarly 245 Indian and foreign insurers and provident societies were taken over
by the central government, for Nationalisation, that how LIC was formed, by an Act of
Parliament, through the LIC Act of 1956.

1956 was also the year for second 5 yr plan. The Second 5 yr plan focused on the development
of the public sector and rapid industrialization. As part of the second 5 year plan, the Indian
parliament adopted the policy of Industrial Policy Regulation (IPR of 1956). According to this
Resolution, India under socialistic pattern of society, will provide more powers to the
governmental machinery. That means it was time for the development of Public Sector
Enterprises. To meet Nehru’s National Industrialisation Policy, his vision was carried forward by
Dr. V. Krishnamurthy (Father of PSU’s in India). A large number of companies which were not
doing financially well were taken over by the government from the private sector and turn them
into public sector undertakings.

The 3rd 5 year plan was from (1961-66). The focus shifted from Industrialisation to Agriculture
because India was at the verge of having mass famine. This was also the time when Green
Revolution arrived in India. The Idea started in India in early 1960s by Dr. M.S Swaminathan,
then on 20th Oct 1962 India China war happened, and that exposed weaknesses in the Indian
Economy. The focus from agriculture then shifted on to the defence Industry and Indian Army.
On 9th June 1964 Lal Bahadur Shastri became the second prime minister of India. Next Year in
January 1965 Food Corporation of India was setup. Agriculture was primarily dominated by
private players. The plan for nationalizing the sector started in 1964, with passing of the Food
Corporation Act 1964. In January 1965 The Food Corporation of India and Agriculture Prices
Commission was setup all with he intention of helping the poor farmers. In April 1965 India was
at war with Pakistan. In the following months there was also severe drought in 1965 due to failed
monsoon. There was a massive need to boost India’s food production. Shastri also promoted the
Green Revolution in India in 1965. This led to an increase in food grain production especially in
Punjab Haryana and Uttar Pradesh. However Green Revolution flourished after 1967 under the
leadership of Prime Minister Indira Gandhi.

India Gandhi became Prime Minister on 24 th January 1966, after Lal Bahadur Shastri’s death in
Tashkent Uzbekisthan. Green Revolution beared its fruits post 1967 under the leadership of
Prime Minister Indira Gandhi. It did so well that from 1967 to 1978, it changed India’s Status
from food deficit to country to one of the world’s leading agricultural nation. It also created
plenty of Jobs for agricultural workers as well as industrial workers. However from 1960 to
1970, India faced two wars and one famine. If we talk about the general economic condition of
the country the following problems such as the rising prices of the commodities, unemployment,
economic stagnation and food crises were the reality. On 19th July 1969 Indira Gandhi
announced the Nationalisation of 14 largest bank in India. For this decision, she was also
expelled from the congress party on 12th November 1969 for indicipline, but she didn’t lose her
position as prime minister, instead the congress party split into two, INC(O) Syndicate (Old
Members) and INC (R) Requisition (Indira’s New Party).

On 13th Jan 1970 operation flood was launched, which is also referred to as white revolution, also
called Dairy Development Plan, which transformed India from a Milk Deficit country to world’s
largest milk producer. White Revolution also started in mid 1960s during Lal Bahadur Shastri’s
time, officially it gained more momentum in the 70’s, Then in December 1971 India fought
another war with east Pakistan which led to the formation of Bangladesh. At this time India was
facing high inflation due to war-time expenses. In October 1973, oil crises begins. The oil prices
becames 4 times from 3$in 1972 to 12$ in 1974. India’s oil import bills were shooting the sky as
a result it was starting to show negative impact on countries budgets, and our economy as a
whole. Because of the oil crises, government started exploring it’s energy options, a fuel policy
committee was setup for this purpose and they identified coal as a viable source of commercial
energy and also the energy sector needed more investment for growth, which was not possible as
long as the coal mines largely remain in the hands of private sector. On 1 st may 1973, Central
Government took over the management and Nationalised all the coal mines in India and named it
as Coal India Ltd.

In 1970’s India also entered the nuclear club with Pokharan test. India conducted its 1 st Nuclear
Test on 18th May 1974 in Pokharan Rajasthan. India became the 1 st nation outside the 5
permanent members of UN Security Council to test nuclear weapons. It changed India’s image
on Global stage, because after the success of this test, India was now a nuclear weapon state, and
that played an important role modify the terms of engagement with other states accordingly. By
the end of 1974 in December government of India took over 103 private textile mills and
nationalized it as Sick Textile Undertakings (Nationalization) Act 1974. The word sick means
those companies who are not doing good financially. The Nationalisation Process of textile
companies was started back in 1968, but it became full fledged in 1974 after the parliament
enacted the law.

On the mid-night of June 26 1975 PM Indira Gandhi imposed emergency on the nation u/d
Article 352(1) of the Constitution. The emergency period went on till 21 st March 1977. In 1977
march 24th there was an election where Indira Gandhi lost to Morarji Desai. He was the 4 th Prime
Minister of India and led the Government formed by the Janta Party Alliance. It was an alliance
of (INC (OLD) + Jan Sangh+ Bhartiya Lok Dal+ Socialist Party). After winning the election
even the Janta Party Alliance followed the same socialist approach that the congress party did. It
was under Janta Party that the Right to property stopped being a fundamental right via 44th
Amendment Act of 1978. The idea was to bring Land Reforms and bring Social Justice, taking
land from Land Owners who had surplus land to landless farmers but to on the other hand, it
wasn’t necessary for the government. For example if government wanted to build a dam or
construct a road it had to acquire people’s property and in return people used to revolt and
approach judiciary, even when the govt gave compensation in money or land somewhere else.
Hence this created problems to the development functions to the government, and that is why
right to property was abolished.

In 1980’s one of the last phrases of socialism prevailed when Indira Gandhi became prime
minister of the country 3rd time on 14th Jan 1980. As soon as she came to power she nationalized
6 more banks namely (Punjab and Sind Bank, Vijaya Bank, Oriental Bank of India, Corporate
Bank, Andhra Bank, New Bank of India). These banks were the majority lenders to the economy
at that time. They literally dominated the banking sector.
If we notice, nationalization of banks, insurance, agriculture, textile, coals, steel, airports and
railways ensured that by late 1970’s the government dominated almost all parts of the economy.
When Indira Gandhi became the Prime Minister for the 3rd time in 1980 at that time the Indian
economy was very weak. In previous year that is in 1979 under the Janta Party government,
India was facing the strongest recession that was -5.2% and high inflation that is 18.2%, which
was very high in the history of modern India. That is when Indira Gandhi introduced the 6 th 5
year plan, which was from 1980 to 85, the beginning of economic libralisation.

Apart from nationalizing 6 more banks, she started tightening public expenditure and turned her
focus towards greater Public Sector Undertakings. Ration shops were closed which led to
increase in food prices and an increase in the cost of living. Family Planning was also expanded
in order to control over population. On 12th July 1982 The National Bank For Agriculture and
Rural Development (NABARD) was established by the recommendation of “Shivaram
Committee.” She also started slowly deregulating the private sector and started liberalizing the
capital market. This New approach at 1980’s was referred to as Operation Forward. In other
words this was the end of Nehruvian Socialism which her daughter Indira continued till late
1970s. Indira Gandhi was assassinated on 31st Oct 1984, although she initiated the process of
libralisation, but couldn’t take it to any reasonable heights.

After her death her son Rajiv Gandhi became the prime Minister of India. The 7 th5 yr plan from
1985 to 1990 was led by the congress party with Rajiv Gandhi as the Prime Minister. He pushed
for the liberalization of the Indian economy. In he 1st 3 years of his term, because he recognized
that the process of liberalization has to start. On 1 st April 1986, the Mahanagar Telecom Nigam
which is also called MTNL and with Videsh sanchar nigam limited VSNL were founded by the
Govt of India to upgrade the quality of telecom service. This expanded the telecom sector,
introduced new services, and to raise revenue for telecom development needs of India in key
metro cities that is Delhi, the political capital and Mumbai the Buissness Capital. So in a way it
can be said that India’s Telecom boom actually started in the mid 1980’s. In 1989, key Telecom
commission was setup, it was responsible for policy formulation, licensing, wireless
management, administrative monitoring of issues, research and development and standarisation
of validation of telecommunication equipment. The Government single handedly couldn’t
manage this work. It took the help of the private sector. After the formation of telecom
commission in 1989, major International player entered the eqippment manufacturing market.
The congress lost at 1989 general election, because in the mid 1987 the bofor’s scandal damaged
the Rajiv Gandhi corruption free image and caused a major defeat for it’s party in 1989 elections.
After that for 2 years Govt of 1981 there was a minority govt in power where the Prime
Minister were not from the INC.

Again in the general election of 1991, that is for the 10th Lok Sabha, the result of the election was
that no party can get a majority. So again a minority govt was formed which included INC with
the help of Left leaning parties, resulting in stable govt for next 5 years, under the new Prime
Minister P.V Narsimha Rao on 21 st June 1991, and his finance minister was Dr. Manmohan
Singh. They both on 4th July 1991 introduced new economic policy which is known as the LPG
model. The Govt took a series of measures to restructure the economy and deal with financial
crises. The opening up of Economy led to increase in Foreign Direct Investment, and that
influenced the overall economic growth of country in a significant manner. Socialism shaped the
initial economic and social policy of the Indian govt after Independence until early 1990’s. Later
India moved to a more market base economy. If we notice even the Soviet Union was collapsing
at that time, proving that more socialism couldn’t be solution to India’s Economy. Meanwhile in
China, Dan Jo Ping had revolutionized china with market friendly reforms. So Indian politicians
also turned the direction of the market. But if we pinpoint the exact time when socialism in India
came to an end that is when Indira Gandhi became the Prime Minister in 1980s. as she entered
the 6th 5 yr plan which is from 1980 to 85. It marked the beginning of liberalization and the end
of Nehruvian socialism. With 1991 LPG reforms India steered towards more market friendly
reform.