How Does The PLI Scheme Work?

How Does The PLI Scheme Work?

Known to avail a major boost to GOI’s goal of Aatma Nirbhar Bharat, let us understand what the PLI scheme is all about.

Crux of the Matter

What Is It?
Production Linked Incentive Scheme (PLI) was introduced by GOI in March 2020 and it aims at:

  • Making India a Manufacturing Hub.
  • Increasing Foreign Investments
  • Managing Trade Balance.
  • Lifting Standard of Living through expanding employment opportunities.

How Does It Work?
Incentives are based on investment & targeted increments in production.

For example, a firm manufactured 2,000 units in FY 19 -20. Now in 2020 -21, if production increases to 3,000 units., then the incentives applicable will be between 4% – 6% on the incremental 1,000 units produced.

Eligibility

  • Should be an Indian manufacturing company.
  • Companies having a registered production unit in India are eligible.
  • Firms can either set up a new unit or demand PLI for existing ones.
  • Applicable for 5 years – FY 19-20 to be considered a base year.

Sector Wise Allocation

  • Mobiles & Electronic components – ₹40,951 crore
  • Critical drugs & API’s – ₹6,940 crore
  • Medical devices – ₹7,420 crore
  • ACC battery – ₹18,100 crore
  • Electronic/technology products – ₹5,000 crore
  • Automobile & components – ₹57,042 crore
  • Pharmaceutical drugs – ₹15,000 crore
  • Telecom and networking products – ₹12,195 crore
  • Textile products – ₹10,683 crore
  • Food products – ₹10,900 crore
  • Solar PV – ₹4,500 crore
  • White goods (ACs and LEDs) – ₹6,238 crore
  • Specialty steel – ₹6,322 crore

The Hitches

December 2020
Apple Manufacturers, Samsung, Lava, Micromax asked the GOI to roll over the production targets under PLI because of their inability to meet the same.

October 2020
Even after 2 months of announcing the PLI scheme, the applicants were yet to receive the formal letters, striking uncertainty.

Curiopedia
  • The inverse of a bonus payment, that is when base salaries shrink on poor performance, is called a malus.
  • The term clawback or claw back refers to any money or benefits that have been given out but are required to be returned (clawed back) due to special circumstances or events, such as the monies having been received as the result of a financial crime, or where there is a clawback provision in the executive compensation contract.
  • Performance-related pay is a salary or wages paid system based on positioning the individual, or team, on their pay band according to how well they perform. A fundamental criticism of performance-related pay is that the performance of a complex job as a whole is reduced to a simple, often single measure of performance.

Decoding Budget 2021 IV: Financial And Fiscal Measures

The most awaited Union Budget 2021 is here! Let us understand some key announcements made in the financial and fiscal sectors.

Crux of the Matter

Read Summachar coverage of the first pillar of the budget: Decoding Budget 2021 I: Health And Wellbeing

Financial Capital

  • Proposed Securities Market Codes by consolidating 4 existing codes.
  • Regulating gold exchanges.
  • Provided outlay of ₹2500 crores for promoting renewable energy sources.
  • Insurance FDI increased to 74% from 49%.
  • Disinvestment of multiple PSUs in process. 

Other Key Highlights

  • Setting up of an Asset Reconstruction Company (India) Limited and Asset Management Company to manage and dispose the debt to alternative investments.
  • Allocated ₹20k crores for PSBs recapitalization.
  • Threshold for categorization of small companies increased to ₹2 crores for paid-up capital and ₹20 crores for turnover.
  • NRIs allowed to register One Person Companies.
  • E-courts for debts resolutions in NCLT.

 Fiscal

  • Fiscal deficit pegged at 9.5% of GDP for 2020 – 21. Projected 6.8% in 2021 – 22 and 4.5% in 2025 – 26.
  • Senior citizens over 75 years of age with only interest and pension income are exempt from filing IT returns.
  • Dispute Resolution Committee set up for people with income less than ₹50 lakhs and disputed income of up to ₹10 lakhs.
  • Proposed rules to get rid of Double Taxation for NRIs.
  • Tax Audit limit to increase to ₹10 crores.
  • Advance tax liability on dividend income shall arise only after the declaration/payment of dividend.

Other Measures

  • Tax Holidays for affordable housings and startups until March 2022.
  • Customs duty reduced on iron and steel to 7.5% and on copper to 2.5%.
  • Cotton duty raised to 10% from nil., and silk’s to 15%.
Curiopedia
  • In economics and political science, fiscal policy is the use of government revenue collection and expenditure to influence a country’s economy. The use of government revenues and expenditures to influence macroeconomic variables developed as a result of the Great Depression when the previous laissez-faire approach to economic management became unpopular.
  • At 2 hours and 41 minutes, the budget speech was the longest ever delivered by a Finance Minister of India. Nirmala Sitharaman is also only the second woman to present the budget for a second time after Indira Gandhi.
  • The practice of presenting budgets and fiscal policy to parliament was initiated by Sir Robert Walpole in his position as Chancellor, in an attempt to restore the confidence of the public after the chaos unleashed by the collapse of the South Sea Bubble in 1720.

Decoding Budget 2021 III: Other Measures

The most awaited Union Budget 2021 is here! With six new pillars introduced this time, let us understand some key announcements made with regards to the endmost pillars.

Crux of the Matter

Read Summachar coverage of the first pillar of the budget: Decoding Budget 2021 I: Health And Wellbeing

Inclusive Development For aspirational India
Sectors Include:
– Agriculture & Allied Activities | Farmer’s Welfare | Rural India | Migrant Workers
– MSME’s Allocation: 15,700 Crores
– SWAMITVA scheme now applied to all states and UT’s
– Rural Infrastructure Development Fund: 40k Crore
– Doubling Micro Irrigation Fund corpus to ₹ 10K crores
– Seaweed Park to be established in Tamil Nadu

Agriculture & Fisheries
Extending the scope of  below initiatives:
Swamitva Scheme | e- Nam | Operation Green | Micro irrigation Fund | Rural Infrastructure Development Fund.  

Other Announcements
– A central portal to be launched for the unorganised workforce that would aid migrant workers in receiving social benefits.
– One Nation One Ration Card has covered 86% of beneficiaries.

Reinvigorating Human Capital
– 100 New sainik Schools to be established in partnership with NGO’s
– Central University to  set up in Leh
– 750 Eklavya Model Residential schools in tribal areas with an increased unit allocation.
– Partnership with Japan for vocational skills and trainings 

Innovation & R&D
– National Research Fund Outlay :  50k Crores over 5 years
– National Language Transmission Mission to enable policy knowledge in all major  regional languages
– Gaganyan’s unmanned launch slated in December 2021.
– Deep Ocean Mission ( 4k Crores )for exploring conservations of our biodiversity 

Minimum Government Maximum Governance
– Setting a conciliation mechanism and mandating its use for contractual disputes
– Census 2021 would  be India’s first digital one
– Women Tea Workers in Assam: 1k Crore

Curiopedia
  • Ministry of Jal Shakti is a ministry under the Government of India which was formed in May 2019 under the second Modi ministry. This was formed by merging of two ministries; Ministry of Water Resources, River Development & Ganga Rejuvenation and Ministry of Drinking Water and Sanitation.
  • At 2 hours and 41 minutes, the budget speech was the longest ever delivered by a Finance Minister of India. Nirmala Sitharaman is also only the second woman to present the budget for a second time after Indira Gandhi.
  • The practice of presenting budgets and fiscal policy to parliament was initiated by Sir Robert Walpole in his position as Chancellor, in an attempt to restore the confidence of the public after the chaos unleashed by the collapse of the South Sea Bubble in 1720.

Decoding Budget 2021 II: Physical Capital & Infrastructure

The most awaited Union Budget 2021 is here! With six new pillars introduced this time, let us understand the announcements made in the second pillar, which is Physical Capital & Infrastructure.

Crux of the Matter

Read Summachar coverage of the first pillar of the budget: Decoding Budget 2021 I: Health And Wellbeing

Pillar 1: Physical &Financial Capital & Infrastructure
Total Outlay:  27.1 lakh Crore
A sharp increase in capital expenditure. Provided ₹ 5.54 lakh crores,  34.5% more than the Budgeted Estimate of 2020-21.

Production Linked Scheme
Outlay: ₹1.97 lakh crores over 5 years for13 manufacturing sectors
Aims at: 
– Bringing scale at size to key sectors
– Nurture global champions
– Provide youth jobs

Textiles
Mega Investment Textiles Parks (MITRA) 
7 textile parks to be established over 3 years to make the textile industry globally competitive

Infrastructure
Expanded National Infrastructure Pipeline (NIP) to 7400 projects
Ways for enriching the NIP funding:
– Creation of Institutional Structures
– Thrust on Monetizing assets
– Enhancing the share of capital expenditure in central and state budgets.

Asset Monetisation
National Monetization Pipeline for brown field projects would be launched. Asset Monetisation dashboard to be created.
Initiatives Includes:
– NHAI Operational Toll  &  PGCIL Asset transmission 
– Oil and Gas Pipelines of GAIL, IOCL and HPCL
– Railway Freight Corridors 
Airports at Tier II and III cities
– Warehousing assets & Sports Stadiums.

Roads & Highways

Economic Corridors announced: 

  1. 3500 km in Tamil Nadu. Outlay – ₹1.03 lakh crores
  2. 1100 kms in Kerala. Outlay – ₹65k crores
  3. 675 kms in West Bengal. Outlay – ₹25k Crores.
  4. 1300 kms in Assam. Outlay – ₹34k Crores, in addition to the existing ₹19k Crores.

Urban & Power Infrastructure

  • Public Bus Transport Service (PPP): ₹18k Crore
  • Metro Light & Metro Neo to be launched at affordable rates in 
  • Fundings provided to following city metros:
    Kochi | Chennai | Bengaluru | Nashik | Nagpur
  • Framework to give consumers choice of selecting from more than one power distribution companies.
  • DISCOMS revamp scheme: 3.05 lakh Crore

The Residuals

  • 100% electrification of Broad-Gauge routes to be completed by December, 2023. 
  • 7 Port Projects worth  ₹ 2000 Crore on a Private-Public Partnership mode.
  • Ujjwala Scheme to extend to 1 Crore more beneficiaries by adding 100 more districts.
  • Gas Pipeline in J&K.
Curiopedia
  • Ministry of Jal Shakti is a ministry under the Government of India which was formed in May 2019 under the second Modi ministry. This was formed by merging of two ministries; Ministry of Water Resources, River Development & Ganga Rejuvenation and Ministry of Drinking Water and Sanitation.
  • At 2 hours and 41 minutes, the budget speech was the longest ever delivered by a Finance Minister of India. Nirmala Sitharaman is also only the second woman to present the budget for a second time after Indira Gandhi.
  • The practice of presenting budgets and fiscal policy to parliament was initiated by Sir Robert Walpole in his position as Chancellor, in an attempt to restore the confidence of the public after the chaos unleashed by the collapse of the South Sea Bubble in 1720.

Decoding Budget 2021 I: Health and Wellbeing

The most awaited Union Budget 2021 is here! With six new pillars introduced this time, let us understand the first pillar of health and wellbeing in this story.

Crux of the Matter

Pillar 1: Health and Well-Being
KEY AREAS: Preventive, Curative & Wellbeing
Total Outlay: ₹ 2.23 Lakh Crore,
Increased by 137% as compared to previous year. 

PM Aatma Nirbhar Swasth Bharat Yojna
Outlay:  ₹64,180 crores over 6 years
– Major Interventions Include: Setting up of 15 Health Emergency Operation Centers and 2 mobile hospitals
Expansion of the Integrated Health Information Portal to all States/UTs.
– To support 17,788 rural and 11,024 urban Health and Wellness Centers
– Setting up of a national institution for One Health, a Regional Research Platform for WHO South East Asia Region

Nutrition
MISSION POSHAN 2.0 :
– To adopt an intensified strategy to improve nutritional outcomes across 112 Aspirational Districts.

Universal Coverage Of Water Supply
JAL Jeevan Mission (Urban) : 

Outlay:  ₹ 2,87,000 crores over a period of 5 years.
Aims at:
– Universal water supply in all 4,378 Urban Local Bodies.
– 2.86 crores household tap connections
– Liquid waste management in 500 AMRUT cities

Swachch Bharat, Swasth Bharat
Urban Swachh Bharat Mission 2.0
Outlay:  ₹ 1,41,678 crores over a period of 5 years
Focused on:
– Faecal sludge management and waste water treatment
– Source segregation of Garbage
– Reduction in air pollution & single use plastic.

Scrapping Policy

Voluntary Vehicle Scrapping Policy:
– In order to face out old an environmentally unfit vehicles
– Vehicles to undergo fitness tests in automated fitness center after,

  1. 20 years in case of personal vehicles.
  2. 15 years in case of commercial vehicles.

Vaccines
– Covid Vaccine: To be provided with ₹35,000 Crores, with further funds to be provided if required.
– Pneumococcal Vaccine: To  be rolled out across the country , averting 50k child deaths annually. 

Curiopedia
  • Ministry of Jal Shakti is a ministry under the Government of India which was formed in May 2019 under the second Modi ministry. This was formed by merging of two ministries; Ministry of Water Resources, River Development & Ganga Rejuvenation and Ministry of Drinking Water and Sanitation.
  • At 2 hours and 41 minutes, the budget speech was the longest ever delivered by a Finance Minister of India. Nirmala Sitharaman is also only the second woman to present the budget for a second time after Indira Gandhi.
  • The practice of presenting budgets and fiscal policy to parliament was initiated by Sir Robert Walpole in his position as Chancellor, in an attempt to restore the confidence of the public after the chaos unleashed by the collapse of the South Sea Bubble in 1720.