Are Production Linked Incentives good for Indian industry?
Exploring the Co-creator forum concept
The PLI intiative, which has apparently produced significant results in manufacturing and exports in India over the past few years is being heatedly commented upon. The views essentially fall into two camps. A sceptical one by noted economist Raghuram Rajan and two fiercely supportive ones by Indian policy influencers/makers. What follows is the process which this Co-creator forum seeks to explore and implement in finding the deeper understanding /truth for the eventual collaborative generation of better knowledge.
This process comprises of 1. the posting of images of all articles on the topic 2. comments of different domain experts on the facets of (a) apparent intent, (b) cognitive biases, (c) contradictions within, (d) conflict with others, (e) inaccuracies, (f) voids, (g) faulty reasoning and finally (h) faulty summarising.
Names of the commenters will not be disclosed, so as to overcome reader bias by other experts. Seniors will be asked to offer their comments at the end.
I will start with the comments.
(a) apparent intent :
RR - To bring to light possible weaknesses in the policy, in view of lack of data
SM- To highlight past decades of inadequacies and worthiness of new approaches
RC-
(b) cognitive biases:
RR - No bias against the current dispensation is apparent. No political angles brought up.
SM- Seems strongly revisionist, influenced by past weaknesses.
RC- "Rajan held powerful positions in the Congress govt" - Did he? He was governor of an autonomous body.
(c) contradictions within:
RR - Nil
SM-
RC-
(d) conflict with others:
RR -
SM-
RC-
(e) inaccuracies:
RR - Taking the example of Iphones only and not other cellphones from China/South Korea may provide a partial picture.
SM- Assuming that RR took a wrong example in Iphone/luxury segment in a low income country
RC- "RR suggests India should focus on services rather than manufacturing" - RR did not say anything about services; "The Iphone ....40% ... " - RR used Iphone3 as an example, RC seems to have taken it as the segment in question; "Today, 90% are made in India..." - But, as RR queried, with what value addition? He asks - "there appears to be no requirement for ... minimum value.."
(f) voids:
RR -
SM- He doesnt comment on what exactly incentivised Vedanta-Foxconn to invest 20B.
RC-
(g) faulty reasoning :
RR -
SM- "Economies incentivise exports via tax holidays on products where they have comparative advantages" If there is a comparative advantage, what is the need to incentivise exports? It will happen automatically. Not clear.
RC- "During UPA.... was forced to import 80% ..." Imports are based on consumers choice and demand. No one is forced.
(h) faulty summarising:
RR -
SM- "PLI is a new experiment. Atleast we will make new mistakes..." Does that mean we ignore the weaknesses? And new experiments and new mistakes are acceptable, when scientific reasoning can be used to reduce them?
RC- "I have always maintained.....negative ..against PM Modi" - Does RR indicate a motive to down Modi or is he being objective and impersonal?