Government’s Production-Linked Incentive (PLI) Scheme will likely help India’s
economy grow at 8.7% in the next financial year 2022-23, beating emerging
market peers including China, said the World Bank. In comparison, China,
Indonesia and Bangladesh are expected to grow at 5.1%, 5.2% and 6.4%
respectively in the emerging market and developing economies.
World Bank upgraded its expectations for India’s growth to 8.7% in FY
The World Bank
said in its Global Economic Prospects report it has upgraded its expectations
for India’s growth to 8.7% in FY 2022-23 and 6.8% in FY 2023-24 “to reflect an
improving investment outlook with private investment, particularly
manufacturing, benefiting from the Production-Linked Incentive (PLI) Scheme,
and increases in infrastructure investment.”
In the wake of
COVID-19 pandemic, the Centre launched the PLI scheme with incentives of Rs
1.97 lakh crore over a five-year period for 13 key sectors, to boost production
and exports. Government has launched the scheme for sectors such as telecom,
electronics, auto parts, advanced batteries, pharmaceutical drugs, and solar
This incentivising scheme to increase the country’s production
scheme in turn is expected to increase the country’s production by $520 billion
in the next five years, Prime Minister Modi said last year.
PLI to add 1.7% to India’s GDP
India is expected
to add 1.7% in its GDP by 2027 through these schemes spurring new jobs, BNP
Paribas Asset Management said in a note.
They could add a
substantial 0.3% to annual GDP growth between 2023 and 2027. The direct impact
of these schemes is likely to be larger on labour (an estimated 2.8 million new
jobs) than on capital spending (estimated at $28 billion). There is likely to
be significant upstream activity as a result, driving further gains in jobs and
spending,” the note added.
India holds potential to tap into the market gap left by China
As an emerging
economy, India holds potential to tap into the market gap left by China, as the
latter recoups itself from supply chain snags and trade war with the United
States. “As a stable economy with a host of enabling factors for attracting
investments, we believe India is a natural choice in filling the supply chain
vacuum the exodus from China has left. Recognising this opportunity, India’s
prime minister has laid out his vision of a ‘Self-reliant India’,” BNP Paribas
Asset Management said.
The World Bank
however gave a positive outlook for India saying investments in India should
benefit from the resumption of contact-intensive services, and ongoing but
narrowing monetary and fiscal policy support. “The growth outlook will also be
supported by ongoing structural reforms, a better-than-expected financial
sector recovery, and measures to resolve financial sector challenges despite
ongoing risks,” IMF said.
The global economy is entering a pronounced slowdown amid fresh
As per the Global
Economic Prospects report, following a strong rebound in 2021, the global
economy is entering a pronounced slowdown amid fresh threats from COVID
variants and a rise in inflation, debt, and income inequality that could
endanger the recovery in emerging and developing economies.
For the fiscal
year 2021-22 the Washington DC-based institution said it has kept its GDP
expectations unchanged at 8.3%.
According to the
government’s first advance estimates India released last week, India is
expected to grow at 9.2% in comparison to RBI’s forecast of 9.5%.