In anticipation of the upcoming interim budget, Deloitte’s budget expectations report suggests that the government might take strategic steps to foster sustainable growth in income for rural households and amplify disposable income within the rural economy.
To invigorate the manufacturing sector and address employment concerns, Deloitte proposes an extension of the Production-Linked Incentive (PLI) scheme to encompass job-intensive sectors such as garments, jewellery, handicrafts, and even explore inclusion in areas like chemicals and services.
Rajat Wahi, Partner at Deloitte India, highlights the significance of the PLI scheme for sectors like leather, garments, handicrafts, and jewellery, emphasizing their pivotal role in employment generation.
“Today we have 14 sectors under the PLI scheme, but a lot of these sectors do not generate massive employment. Leather, garments, handicrafts, and jewellery, many of these sectors need the PLI scheme to come in because they are the ones that generate the most employment. That will help lower-income households as well as urban,” expressed Wahi.
Deloitte’s report underscores the potential of the PLI scheme to stimulate manufacturing demand by expanding its coverage to additional sectors like chemicals and services. The objective is to augment rural infrastructure spending and provide incentives that enhance cash flow, contributing to sustainable income growth in rural areas.
Introduced in 2021, the PLI scheme has, until November 2023, covered sectors ranging from telecommunications, white goods, textiles, medical devices, to pharmaceuticals, with a substantial outlay of Rs 1.97 lakh crore. The scheme’s success is evident with over Rs 1.03 lakh crore invested, resulting in production and sales of Rs 8.61 lakh crore and the creation of over 6.78 lakh jobs.
Deloitte emphasizes the necessity of extending PLI schemes to space tech startups, fostering local manufacturing, and promoting capacity building within the country. These schemes act as catalysts for domestic production, attracting investments through financial incentives based on manufacturers’ output.
As Finance Minister Nirmala Sitharaman prepares to present the interim budget for 2023-24 on February 1, the potential extension of the PLI scheme emerges as a pivotal strategy to stimulate job creation and bolster rural income, aligning with the government’s economic goals.