Make in India and PLI Schemes
The Fiscal Cost and Who Benefits
PLI payments are large, and critics ask whether the jobs and exports created justify the cost, and whether firms would have invested anyway.
Every incentive has a price tag.
Cost
Payments are spread over several years, and total commitments are substantial.
Additionality
The key question is whether the subsidy caused investment that would not otherwise have happened.
Jobs
Some schemes have created fewer jobs than hoped, because modern factories use automation.
Who gains
Large firms often qualify more easily than small ones.
A free rider
A firm that would have expanded anyway receives an incentive for doing so.
Counting output without counting cost
Value for money matters.
Key takeaways
- PLI has a large fiscal cost.
- Additionality is hard to prove.
- Job creation may be modest.
- Large firms benefit most.
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