'Atmanirbhar Bharat' not protectionism

New Delhi: While some commentators have likened the Atmanirbhar Bharat approach to a return to old school protectionism, far from it, the focus on economic resilience is a pragmatic recognition of the vagaries of international supply-chains, the Economic Survey tabled in Parliament said on Monday.The Survey has noted that a distinguishing feature of India's economic response has been an emphasis on supply-side reforms rather than a total reliance on demand management.

These supply-side reforms include deregulation of numerous sectors, simplification of processes, removal of legacy issues like 'retrospective tax', privatisation, production-linked incentives.Even the sharp increase in capital spending by the Government be both demand and supply response as it creates infrastructure capacity for future growth.

The emphasis given to the supply-side in India's Covid-19 response is driven by two important considerations. First, Indian policymakers saw the disruptions caused by travel restrictions, lockdowns and supply-chain breakdowns as an interruption of the economy's supply-side. Although this also squeezed demand, it is not correct to see the pandemic related economic slowdown as just a demand problem as happens with most economic cycles.Second, the post-Covid world will be impacted by a wide variety of factors -- changes in technology, consumer behaviour, geo-politics, supply-chains, climate change and so on. All these factors will also interact in unpredictable ways with each other. Therefore, the post-Covid economy will not be merely a re-inflation of the pre-Covid economy. Simply building it back with demand measures is not a solution, theSurvey noted.

There are two common themes in India's supply-side strategy.