The government’s new-found emphasis on self-reliance, or Atmanirbhar Bharat, to give it its full flavour, has been much in the news recently. The idea hasn’t really been fleshed out, but the gist of it seems to be to restrict imports and to make India a manufacturing base.
It’s reinforced by a message to Indians to buy local products, with the prime minister driving it home through his catchy ‘vocal for local’ slogan. It seems to be ‘Make in India’ plus, together with echoes of the long-forgotten ‘Swadeshi’ movement. When the manufacturing sector shrinks, as it has been doing for the last three quarters, perhaps it’s time to manufacture slogans.
Critics of the new focus on import substitution have not just pointed out that we’ve tried it before liberalisation, with disastrous consequences, but have also drawn attention to the complexities of present day international trade, with value chains spanning many countries. It is no easy matter to decide what level of import content is acceptable in a product—that way lie red tape, inefficiency and lobbying for protection. And then, of course, there’s always the threat of retaliation.
But could it be that we’re already becoming ‘Atmanirbhar’? The accompanying chart shows that merchandise imports declined from 26.8 percent of GDP in 2012-13 to 16.3 percent in 2019-20. One reason is that crude oil prices were much higher in 2012-13. But even if we strip out crude oil imports, the chart shows non-oil merchandise imports as a percentage of GDP fell from 18.3 percent in 2011-12 to 11.9 percent in 2019-20. Part of that decline is due to lower growth, but note that non-oil imports/GDP were falling in 2015-16, when GDP growth was 8 percent. The data seem to suggest that we’re already well on our way to Atmanirbhar Bharat.
The government has been at pains to underline that the idea is to make in India for the world. That doesn’t seem to have happened—as the chart indicates, merchandise exports as a percentage of GDP has been coming down steadily. That’s even truer for non-petroleum-product exports as a percentage of GDP. Again, part of the reason is the slowdown in world trade, but the chart shows the slide started in 2012-13, long before the current disruptions to world trade began and well before President Trump arrived on the scene.
In short, while we’ve already been practising the import restriction part of the Atmanirbhar Bharat policy, the making for the world part hasn’t been going so well. The trouble is that restricting imports further may very well pull down our export performance even more.
(Do write in with your views on ‘Atmanirbhar Bharat’ to Manas.Chakravarty@nw18.com)
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