DOLE OR INCENTIVE?

THE PRODUCTION-LINKED INCENTIVE SCHEME HAS HELPED BOOST INDIA'S MOBILE EXPORTS BUT IS YET TO SHOW RESULTS IN SOME OTHER SECTORS. AGILITY AND EASE OF DOING BUSINESS IN ITS IMPLEMENTATION WILL DETERMINE ITS SUCCESS

- Shwweta Punj

FOR OVER A DECADE, THE SHARE OF MANUFACTURING in India's GDP has remained in the 15-17 per cent range, with various measures by the present and past governments barely helping the needle move. A recent effort to give manufacturing a fillip has been the production-linked incentive (PLI) scheme, announced by finance minister Nirmala Sitharaman between March and November 2020. Targeting 14 key sectors, the scheme, with an outlay of Rs 1.97 lakh crore, aimed to create national manufacturing champions, 6 million new jobs and additional production of Rs 30 lakh crore over the next five years. Over two years after it came into effect, the scheme has come under intense scrutiny, with critics like former RBI governor Raghuram Rajan viewing them as loopholes that end up in the central government lavishing subsidies on manufacturing firms, and the consumers bearing its brunt. The combination of protection and subsidies, he added, was making exports profitable, with manufacturers flocking to be selected for the PLI scheme. The government responded with a very definitive rebuttal, with Rajeev Chandrasekhar, the Union minister of state for IT and electronics, saying that the iPhone model (the iPhone 13 Pro Max) that Rajan cited as an example of the different prices consumers paid in India and Chicago for the same product, constitutes less than 0.5 per cent of the 300 million mobile phones sold in India.