PLI Scheme likely to expand to more sectors

The PLI (Production Linked Incentive) scheme is likely to gain more momentum and would expand to more sectors thereby giving further thrust to growth. According to Dr V Anantha Nageswaran, Chief Economic Advisor, the PLI scheme announced in 2020 and 2021, is currently implemented in two or three areas . However, it is likely to gather steam moving forward.

“PLI is for the medium and long term; it is about creating capacity within India to become a global leader, to attract supply chains into India and to facilitate China-plus-one to happen. The PLI scheme is likely to gain momentum. Right now it is happening in two or three areas – mobile phones, pharmaceuticals and chemicals but it has to pick up steam in other areas as well and hopefully in next two years it will happen,” Nageswaran said addressing the annual session of Indian Chamber of Commerce virtually on Monday.

The PLI scheme was primarily conceived by the government so as to scale up domestic manufacturing capability, accompanied by higher import substitution and employment generation.

According to him, the country’s medium term growth outlook looks good because the balance sheet is good; corporates are willing to invest; manufacturing activity continues to expand and digital infrastructure is becoming more and more important in access to finance leading to formalisation.

Improvement signs
There are signs of improvement in rural consumption as two-wheeler sales have been picking up. There has also been a recovery in employment rate and the balance sheets of both banks and corporate have shown improvement.

“The non-performing assets have come down and banking sector is well recapitalised and ready to lend. Infact, it is already lending,” he said.

Talking about some of the steps that needs to be taken, he said, India should allow rupee to depreciate gradually in the short term and go for judicious use of forex reserves. It is important to build supply chain resilience and augment forex reserves so as to be well prepared for any contingency that may arise during 2023, he said. The Hindu Business Line