Maarg Manthan · Topic 14.4

Atmanirbhar Bharat Abhiyan

Current Affairs & Government Schemes › Industry, MSME and Startup Schemes · Topic 14.4

Atmanirbhar Bharat Abhiyan, or the Self-Reliant India Campaign, was announced by the Prime Minister on 12 May 2020 as a response to the economic shock of the COVID-19 lockdown. The package was put at about 20 lakh crore rupees, close to 10 per cent of GDP, and was rolled out in tranches by the Finance Minister. It rests on five pillars: economy, infrastructure, system, demography and demand. For industry it brought a collateral-free loan facility for MSMEs, a new MSME definition, a fund of funds, reforms in defence, coal and mining, and a push for local manufacturing and vocal for local.

6 min read · UPSC Prelims · Current Affairs & Government Schemes · Industry, MSME and Startup Schemes

At a Glance

Announced 12 May 2020
Package size About 20 lakh crore rupees, nearly 10% of GDP
Five pillars Economy, infrastructure, system, demography, demand
Key MSME tool Emergency Credit Line Guarantee Scheme
Slogan Vocal for local
Phases Atmanirbhar Bharat 1.0, 2.0, 3.0
Exam link UPSC Prelims, Current Affairs and Government Schemes: Industry, MSME and Startup Schemes

Where Does It Fit?

This topic covers the industry and MSME side of the 2020 package. A separate topic in the macro on national missions covers the idea of self-reliance as a whole, see Atmanirbhar Bharat Abhiyan (Self-Reliant India) for that wider frame. Previous topic: Production Linked Incentive (PLI) Schemes. Next topic: MSME Champions Scheme.

What Industry and MSME Measures Did the Package Contain?

Measure	Details
Emergency Credit Line Guarantee Scheme	Collateral-free automatic loans of up to 20 per cent of outstanding credit for MSMEs and other borrowers, with a full guarantee by the National Credit Guarantee Trustee Company, for a total of about 3 lakh crore rupees initially
New MSME definition	Revised in May 2020 to include turnover as a criterion, and manufacturing and services treated alike. This was later revised again with effect from 1 April 2025
Fund of funds for MSMEs	A fund of 10,000 crore rupees to give equity support to viable MSMEs through a mother fund and daughter funds
Subordinate debt	A scheme of 20,000 crore rupees for stressed MSMEs, to be given as quasi-equity
Global tender curbs	No global tenders for government purchases up to 200 crore rupees, to help local firms
Statutory dues	Relief on EPF contributions for some months and the payment of dues to MSMEs within 45 days

Which Sector Reforms Came With It?

Defence: automatic FDI limit in defence manufacturing raised from 49 to 74 per cent and a list of items banned from import, called a positive indigenisation list
Coal and mining: commercial mining of coal opened to private firms, with revenue sharing and easier auctions for mineral blocks
Agriculture: an Agriculture Infrastructure Fund of 1 lakh crore rupees, a Micro Food Enterprises scheme and amendments to the Essential Commodities Act
Power: privatisation of distribution in Union Territories and a new tariff policy approach
Space and atomic energy: private participation in space activities and a new regulator, followed later by the creation of IN-SPACe
Social infrastructure: viability gap funding for social infrastructure and the Affordable Rental Housing Complexes for migrants
Companies law: decriminalisation of minor offences under the Companies Act and a framework for listing in foreign jurisdictions
Later phases: Atmanirbhar Bharat 2.0 and 3.0 in October and November 2020 added Production Linked Incentive schemes, Atmanirbhar Bharat Rojgar Yojana and more, as in Atmanirbhar Bharat Rojgar Yojana

What Else Should You Remember?

Idea behind it: the aim was to cut dependence on imports in key areas such as electronics, medicines and defence goods, while still staying open to trade
Fiscal cost: the headline of 20 lakh crore rupees included the Reserve Bank liquidity measures and earlier announcements, so the direct fiscal cost was much smaller, which is a common exam point
ECLGS uptake: the guarantee scheme was extended several times and its limit was raised, and it is widely seen as the most used element for small firms
Link with PLI: incentives on production were introduced under the package and expanded, as in Production Linked Incentive (PLI) Schemes
Link with Make in India: the package is often described as the second phase of the manufacturing push, as in Make in India Initiative
Vocal for local: a slogan from the announcement that asks citizens to prefer Indian products and to promote local brands globally
Criticism: economists said the package leaned on credit and guarantees and gave less direct demand support or cash to households and firms
Impact on small firms: credit support reduced closures during the shock, but many firms in the informal sector were left out of formal credit schemes
Import substitution risk: higher tariffs and import bans can raise input costs for firms that use imported parts, which weakens export competitiveness
Present status: the original tranches were short-term, while the policy approach continues through PLI schemes, defence indigenisation lists and later missions

Why Does It Matter for the Exam?

Date and size: 12 May 2020 and about 20 lakh crore rupees
Five pillars: economy, infrastructure, system, demography and demand
MSME tools: ECLGS, new definition, fund of funds and subordinate debt
Sector reforms: defence FDI at 74 per cent, coal mining and space
Common errors: confusing it with Make in India or giving the wrong FDI limit

As an analytical point, the package was strong on credit and structural reform but light on direct demand support. Its lasting value lies in the reforms it started, such as defence indigenisation and production incentives, and not in the headline number.

Why Is This Topic Important?

Prelims Pillars, size and MSME measures
Mains Self-reliance and industrial recovery
Linkage Connects PLI, MSME policy and defence reforms

What Came Next?

The next topic covers a scheme that helps small firms become competitive and clean. Next topic: MSME Champions Scheme.

Key People and Terms

ECLGS Emergency credit guarantee scheme
Vocal for local Prefer local brands
Positive indigenisation list Items banned from import
Subordinate debt Quasi-equity for stressed MSMEs
Mother fund Fund that invests via daughter funds
Tranche One instalment of the package

Exam Corner

Points to Remember

Announced on 12 May 2020, size about 20 lakh crore rupees.
Five pillars: economy, infrastructure, system, demography, demand.
ECLGS: collateral-free loans backed by a guarantee.
Defence automatic FDI raised to 74 per cent.
Slogan: vocal for local.

Do Not Confuse With

Atmanirbhar Bharat Abhiyan and Atmanirbhar Bharat Rojgar Yojana The overall package versus a jobs scheme under phase 3.0
Atmanirbhar Bharat and Make in India Self-reliance package of 2020 versus the 2014 campaign
ECLGS and CGTMSE Emergency guarantee for COVID relief versus the regular guarantee trust for micro and small loans

Memory Hook

Five pillars, twenty lakh crore, credit first, reforms next, local first.

Mains Angle

Questions ask whether the package worked for industry. These points give a balanced frame.

Strengths Credit support and structural reforms
Weaknesses Limited demand support, informal sector gaps
Way forward Production incentives, exports, skills

A Question You May Face

An original practice question, not a past paper question.

“Discuss the measures for MSMEs and industry under the Atmanirbhar Bharat package and assess their effect.”

How to Answer

Intro State the date, size and pillars.
Measures ECLGS, definition, fund of funds, reforms.
Assessment Credit helped, demand support was thin.
Way PLI, logistics, exports, formalisation.

GS Relevance

Prelims: announcement date, five pillars, package size, MSME measures. GS Paper 3: economic recovery, industry and MSME policy, self-reliance, defence indigenisation.

Frequently Asked Questions

What is Atmanirbhar Bharat Abhiyan?

Atmanirbhar Bharat Abhiyan is the Self-Reliant India Campaign announced on 12 May 2020 with a package of about 20 lakh crore rupees. It aims to make India more self-reliant through reforms and relief in industry, MSMEs, agriculture, infrastructure, defence and finance.

What are the five pillars of Atmanirbhar Bharat?

The five pillars are economy, which seeks quantum jumps rather than incremental change, infrastructure, system driven by technology, demography as a strength, and demand, which stands for strengthening the demand and supply chain in the domestic economy.

What is the Emergency Credit Line Guarantee Scheme?

The Emergency Credit Line Guarantee Scheme gives collateral-free automatic loans to MSMEs and other eligible borrowers, up to 20 per cent of their outstanding credit, with a full guarantee from the National Credit Guarantee Trustee Company. It was introduced in May 2020 and extended many times.

What defence reform came with the package?

The package raised the automatic route limit for foreign direct investment in defence manufacturing from 49 per cent to 74 per cent, and announced a list of weapons and platforms for which import would be banned in phases, called the positive indigenisation list.

Was the 20 lakh crore rupees all government spending?

No. The figure included liquidity measures of the Reserve Bank and earlier announcements besides new fiscal measures, so the direct cost to the Union Budget was much lower. Economists often use this point to show how the headline size of the package should be read.

PYQ Practice — Statement Analysis

1 Atmanirbhar Bharat Abhiyan was announced on 12 May 2020.

True

It was a response to the COVID-19 shock.

2 The package had four pillars.

False

It has five pillars.

3 ECLGS gives collateral-free loans with a government-backed guarantee.