top of page

The issue of under-utilized funds for production-linked incentives (PLI) for manufacturing.....

The issue of under-utilized funds for production-linked incentives (PLI) for manufacturing semiconductors in India. It highlights the need for the government to clarify its objectives and outcomes of spending crores of rupees on bringing semiconductor fabrication capabilities to India. As a UPSC aspirant,

  • The funds for production-linked incentives (PLI) for manufacturing semiconductors are under-utilized by upwards of 80%.

  • The Union government needs to clarify what it has achieved and aims to accomplish by spending crores of rupees on bringing more semiconductor fabrication capabilities to India.

  • The PLI scheme for IT hardware has a ₹17,000 crore outlay, while the one for semiconductors and displays has ₹38,601 crore earmarked.

  • Existing schemes show little promise in terms of employment and substantive value addition.

  • Manufacturing facilities for chips employ advanced and automated systems, resulting in few job opportunities.

  • The central wager with these schemes is to attract an "ecosystem" that will increase the value addition of India's electronics manufacturing sector.

  • However, this outcome is not guaranteed, even if PLI benefits are availed optimally.

  • The success of the schemes also relies on global manufacturing giants bypassing the benefits of a globally distributed supply chain, including cheap and accessible international transport facilities for chips.

  • The PLI schemes in India need to be strengthened by encouraging semiconductor design talent domestically.

  • The design-linked incentive scheme shows promise in developing semiconductor design talent.

  • The focus of the PLI funds is mainly on assembly and subsidizing large manufacturing plants, with a significant amount of raw and intermediate material still being imported.

  • Multinational chipmakers are hesitant to make substantive commitments despite incentives.

  • Private capital is uncertain due to advancements in chips and emerging technologies like artificial intelligence.

  • The allocation of resources should be based on a tangible outcome, such as safeguarding cyber sovereignty, making electronics cheaper for Indian consumers, or asserting India as a global electronics manufacturing center.

  • Clarity on desired outcomes would make failures easier to identify and allow for course correction before significant PLI spending occurs with little results.

The Indian economy in the post-COVID-19 years and the factors contributing to it. It highlights the measures taken by the government since 2014 to lift the economy onto a higher growth path, including liberalization, reforms in the banking sector, demonetization, GST implementation, and reduction in corporate tax rates.

  • The Indian economy has grown at an impressive rate in the post-COVID-19 years, with a YoY growth of 7.2% in FY2023, the fastest among major economies.

  • In FY2024, the IMF projects India's YoY growth at 6.3%, again the fastest among major economies.

  • India is currently the fifth largest economy in the world and is projected to become the third largest by 2027.

  • The high economic growth of India cannot be attributed to its small size, as it is a large and rapidly growing economy.

  • Some commentators contest the tagline of 'fastest-growing major economy' and argue that compound annual growth rates should be used instead of YoY growth rates.

  • However, YoY growth rates measure progress despite the pandemic, and the recovery of output lost to the pandemic is significant.

  • The present-day economic dividends are also a result of steps taken to mitigate economic challenges in the pre-COVID-19 period, including strong growth in world trade and a domestic credit boom in the first decade of the century.

  • Growth in world trade fell after the global financial crisis of 2007-08, affecting the Indian economy.



High leverage in the corporate sector led to frequent defaults in repayments and a surge in non-performing assets of public sector banks.

  • The balance sheets of banks and corporations were stressed, leading to a lower investment rate in the Indian economy.

  • The new government implemented measures to lift the economy onto a higher growth path.

  • Calibrated liberalization of the economy resulted in an increase in net foreign direct investment inflows.

  • The Insolvency and Bankruptcy Code (IBC) introduced in 2015 addressed delinquency and lowered non-performing assets in the banking sector.

  • The demonetization drive of 2016 reduced black money and improved tax compliance.

  • The government has been focusing on inclusive growth and poverty alleviation.

  • Various steps have been taken to lift people above the poverty line.

  • Government support towards livelihood enh

ancement, skill development, women's empowerment, and infrastructure development has played a vital role in reducing poverty.

  • The Goods and Services Taxes (GST) and reduction in corporate tax rate have mobilized higher revenues and increased corporate reserves.

  • The government has embarked on a large Capex program and provided resource support to State governments to increase their Capex budget.

  • Private corporate investment has risen by 22.4% in FY23, with 15 out of 19 sectors witnessing an expansion in private capital investment.

  • NITI Aayog report shows a decline in multidimensional poverty in India

  • 13.5 crore Indians escaped multidimensional poverty between 2015-16 and 2019-21

  • Rural areas drive the decline in the Multidimensional Poverty Index

  • Rural living standards have improved with access to basic amenities

  • National Family Health Survey shows improvement in indicators like electricity, drinking water, and health insurance coverage in rural areas

  • Government support for agriculture has led to growth in fruits, vegetables, dairy, livestock, and fishery

  • Share of fruits and vegetables in the food basket increased to 19.4% in 2021

  • Livestock products account for about 38% of the total value of agri-food

  • India aims to achieve high-income status and a high quality of life for its citizens

  • Public discourse should acknowledge successes along with shortcomings to match India's economic progress.

  • The article is a personal opinion piece

  • The author's views are expressed in the article

1 view0 comments

コメント


Post: Blog2 Post
bottom of page