The Emergency Credit Line Guarantee Scheme (ECLGS) was introduced in May 2020. The goal was to support qualified MSMEs and business companies in meeting their operational obligations and relaunching their operations. The lending institutions are provided with a 100% credit guarantee under the programme for the loans they extend to qualified clients. The policy now allows for a maximum permissible guarantee of ₹ 5 lakh crore, up from ₹ 4.5 lakh crore.
On the other hand, An effort called the PLI Scheme i.e. Production-Linked Incentive Scheme offers incentives to domestic industries to increase domestic manufacturing. The project was initiated by the Indian government to encourage domestic and local production in order to create micro jobs as well as to encourage foreign enterprises to find workers in the nation and so create employment.
ECLGS Saved Jobs
The Emergency Credit Line Guarantee Scheme (ECLGS), which was introduced by the government during the pandemic, has prevented roughly 12% (₹ 2.2 Lakh Crore) of the outstanding MSME credit from becoming bad debts. Likewise, 1.65 crore employment has been preserved through November 2022. the State Bank of India provided this estimate. Out of 14.6 lakh MSME (Micro, Small and Medium Enterprises) accounts preserved due to ECLGS, about 93.8% were in the micro and small category. The business sector, which includes grocery stores and other commercial enterprises, has profited the most, followed by food processing, textiles, and commercial real estate. Other than this, MSME loan accounts totalling ₹ 1.8 lakh crore (14%) were kept from becoming NPA. This prevented 1.5 crore workers from going without a job.
PLI Scheme Failed To Create Jobs As Expected
When we talk about the Production Linked Incentive Scheme, not enough jobs are created. The government must assess the benefits and drawbacks of the Production Linked Incentive Scheme (PLI), which has the potential to assist a wide range of enterprises across sectors, before expanding it, according to former Reserve Bank of India Governor Raghuram Rajan on Monday. He contends that this much-publicized plan to increase domestic manufacturing has not resulted in the creation of sufficient numbers of high-quality employment in the nation.
It is said that, When thousands of crores of taxpayer money are at stake, the public deserves greater information and a more educated debate. India needs some time if it isn’t going to generate thousands of employment. The sooner we switch to working schemes, the better. so far, the programme has generated 3% of the predicted additional employment of 0.6 crores, while 15% of the anticipated investment has already poured in. At least in the industries where the programme has been in place for a while, additional information about its efficacy, according to the former Governor, is required.
The government must make more data available for accurate assessment. Without more investigation, however, we can’t rule out the likelihood that this is a sizable and perhaps inefficient transfer of public funds to significant domestic and international businesses. PLIS to sectors in which major industrialists would have invested regardless is a pure gift to them. It cannot be considered a “success” that they invest and produce. This is why the method through which the government chooses which businesses to support must be transparent and available for scrutiny by the general public. PLI programmes depend on exports, and the current state of the world makes it difficult for manufacturing enterprises to adhere to the conditions stipulated in the schemes in order to receive incentives.
At last, According to Raghuram Rajan, this much-heralded programme to support local manufacturing has not resulted in the creation of sufficient numbers of high-quality jobs in the nation. So, additional performance information is required, at the very least for the sectors where the programme has been in place for a while.
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