Recovery in the economy: in the next 5 years, the government can earn 40 lakh crore rupees from the PLI scheme
The Production Linked Incentive (PLI) will boost domestic manufacturing in 14 sectors. According to a report, the government could earn an additional Rs 35-40 lakh crore from this scheme in the next 5 years. Under this scheme, the government will give incentives or subsidies worth Rs 1.8 lakh crore to companies engaged in local manufacturing. The government announced this scheme to compete with China at a time when Corona was growing fastest.
2.7 lakh crores will be given to companies that start manufacturing
According to the report, most of the new manufacturing companies are expected to start in the next 24 to 30 months with an investment of 2 to 2.7 lakh crore rupees. They are expected to get large-scale incentives as they will be manufacturing mobile phones, electronics, telecom equipment and IT hardware.
Managing Director and Chief Executive of CRISIL, Ashu Suyash said that the PLI scheme will play an important role in boosting the growth of the economy in 2021-22. According to the report, industrial investment is expected to increase to 45-50% of the working capital in 2021-22. In 2020-21, the working capital declined by 35% due to the lockdown.
Banks will benefit from this
This will also benefit the banking sector. The credit demand of the banking sector will increase by 400-500 basis points. In the first half of 2020-21, the growth rate of bank credit growth was 0.8%; it increased to 3% in the third quarter. It is expected to increase in the fourth quarter as well. Overall credit growth so far this year is less than 5%.
Bank credit growth refers to lending by banks to companies, businessmen or the general public. That is, the credit growth in the loan increases when there are industrial reforms. Bank credit growth increases the more people take loans from the bank.
What is PLI Scheme?
According to the plan, the center would incentivize additional production and allow companies to export products made in India. The PLI scheme aims to encourage investors to create a competitive environment.
