The government is making investments in industries like capital goods, manufacturing, sustainability, defence, railways, and public sector banks as the budget’s 2023 rolls out. Most importantly, it is predicted that the Budget would continue to prioritise post-pandemic fiscal restructuring, divestiture, and subsidy reduction instead of adopting a populist stance.
In order to combat the effects of the global economic slowdown, which is anticipated to get worse, the federal government is putting the finishing touches on a critical plan to increase India’s GDP growth in FY24.
The government is aiming to give existing production-linked incentive (PLI) schemes a massive allocation boost despite having little fiscal room to go wild with spending, according to The Economic Times.
According to the article, manufacturing is expected to be the scheme’s primary focus, and additional industries may also be introduced. With this, the government might be extending its emphasis on domestic manufacturing in the aftermath of difficult, inflation- and recession-riddled, worldwide conditions.
“We anticipate positive action to support a thriving local component supply chain ecosystem with the upcoming budget. In turn, this will aid India’s transition to self-sufficiency and provide it the proper momentum to become a trillion-dollar digital economy “according to Muralikrishnan B, President of Xiaomi India
PLI allocation and incentive increase are probable
According to sources cited in the ET story, high-impact manufacturing industries including electronics and IT hardware may receive a considerable increase in PLI allocation.
It should be recalled that the previous budget included a total of Rs 1.97 lakh crore for PLI projects, which covered a total of 14 sectors. The incentive amount for the five-year term beginning in FY22 may be increased further in the upcoming budget.
One of the sources included in the ET report claimed that the PLI projects had a discernible influence on the ground, while another claimed that the budgetary allocation might increase by 20–30%.
Since the Covid-19 outbreak, one of the government’s main priorities has been to promote India as a viable rival to China in terms of domestic manufacturing. Similar industrial initiatives would be promoted in the 2019 budget as India seeks to entice international businesses.
Since the state of the world economy began to deteriorate in 2022, the government has been concerned about lower private investment, and the PLI programme might be the best way to address the problem.
Furthermore, experts think that because the payouts do not need to be made right now, a bigger allocation to the PLI plan won’t significantly change the government’s budgetary calculations.