"Under the 'Production Linked Incentive' scheme, the Government of India offers various benefits like reduced importexport duties, incentives to investors, taxrebates etc." In the light of the above statement, identify and explain the Budget objective and its likely consequences.
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Solution and Explanation
The Budget objective highlighted in this statement is to boost domestic manufacturing and attract investment by providing financial incentives. The scheme is aimed at encouraging firms to increase production, reduce reliance on imports, and enhance competitiveness in the global market. Likely Consequences of the scheme:
Increased Production:
By offering tax rebates and other incentives, the government encourages companies to scale up production and make India a more attractive destination for manufacturing.
Employment Generation:
Increased production capacity and foreign investment can lead to higher employment in the manufacturing sector, which benefits the economy.
Improved Trade Balance:
By promoting local manufacturing, the country could reduce imports, improve its trade balance, and boost exports, leading to a more sustainable economic growth model.
Conclusion: The scheme aims to foster industrial growth, attract foreign investment, and create jobs, ultimately contributing to economic growth.
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