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GS Paper: Indian Economy

  • Recovery? Different numbers tell different stories

    India’s growth numbers reveal a different story when seen through the quarter-on-quarter growth lense. The article deals with this issue.

    Weakness of India’s GDP statistics

    • The CSO press release for 4Q20 stated that India grew 0.4 per cent on a year-ago basis.
    • That is, relative to the level of GDP four quarters before.
    • Many heaved a sigh of relief at growth turning positive after two-quarters of negative year-ago: -24.4 per cent in 2Q20 and -7.3 per cent in 3Q20 and declared that growth would accelerate from hereon.
    • Nothing could be further from the truth.
    • To know whether the economy will accelerate or decelerate, one needs to know its current speed.
    • To do that, one needs to compute the quarter-on-quarter growth as almost all large economies do.
    • This is a central weakness of India’s GDP statistics, exemplified by last week’s 4Q20 print.

    Challenges in measuring quarter-on-quarter growth

    • These computations are not easy, because each quarter has its own characteristics or, as economists call it, “seasonality”
    • Seasonality naturally increases or decreases activity in that period.
    • Think of quarters with festivals or with harvests versus those without them.
    • The modern economy is more complicated as its seasonal patterns change when its structure does.
    • To compare two quarters, these changes to seasonality need to be excluded from the data.
    • Statisticians have been working on this issue for more than a century and, over the last two decades.
    • As a result, many official statistical bodies (such as the US Census Bureau) have made deseasonalising methods freely available.

    Understanding the issue through example

    • If the level of 1Q20 GDP is set at 100, then the quarterly growth rates imply that it fell to 75, rising to 91.1 in the following quarter and then to 96.3 last quarter.
    • Now assume that the level of GDP remains constant for the next five quarters, that is, there is no growth in the economy until the end of fiscal year 2021-22.
    • This would mechanically put the full-year growth in 2021-22 at 7.2 per cent simply because of the low average level of GDP in the previous year.
    • If the speed of the economy were to remain at its current pace of 5.7 per cent, then the annual growth in 2021-22 would be an astonishing 28.7 per cent.
    • Any annual growth projection for next year that is less than this necessarily implies a slowdown from the current pace.

    So, what is Indian economy’s current growth rate

    • J.P. Morgan uses one of the above mentioned deseasonalising technique.
    • The derived quarterly path is the following: In 1Q20, India’s economy grew 3.7 per cent over the previous quarter, in 2Q20 the economy contracted 25 per cent and then recovered 21.5 per cent in 3Q20 and ended the last quarter at 5.7 per cent.
    • Put differently, growth slowed to 5.7 per cent last quarter — the latest reading of the economy’s “current” speed.

    Putting in context the projected nominal growth

    • The budget documents suggest that the government’s projected nominal growth for 2021-22 is 14.5 per cent.
    • This implies a real growth rate of around 11 per cent assuming inflation averages 3.5 per cent.
    • The implied average quarterly pace, consistent with an 11 per cent annual growth, is just 1 per cent.
    • The year-on-year quarterly numbers will keep rising giving the false assurance of a strengthening recovery when in reality the level of income would rise only at a grinding pace.

    Reasons behind the deceleration

    • India’s growth drivers had already slowed dramatically prior to the pandemic, the pandemic likely exacerbated them.
    • With listed companies posting strong profit growth in 3Q and 4Q, much of the decline in overall income has fallen on households and MSMEs.
    • This is likely to have not only worsened income inequality, but also severely impaired their balance sheets, making it that much more difficult to access credit in the coming quarters.
    • While industry has recovered to 98 per cent of its pre-pandemic level, the service sector remains substantially below.
    • Thus, much of the continued high unemployment (as reported by private surveys) is in services.
    • This is likely to have disproportionately increased women’s unemployment, thereby widening the gender gap.
    • Last quarter, central government spending rose 12 per cent, but overall public expenditure contracted 1 per cent, implying a sharp contraction at the state level.

    Consider the question “Why quarter-on-quarter growth rates reveal a true picture of India’s growth rate as compared to year-on-year rates? What are the challenges in dealing with the quarter-on-quarter data?”

    Conclusion

    Neither fiscal policy nor monetary policy are designed to reverse these widening economic imbalances. This makes it hard to see India’s growth engines firing on all cylinders, despite the rollout of vaccines and the anticipated surge in US growth.

  • Cairn Energy Tax dispute case Explained

    Indian government’s approach to the Permanent Court of Arbitration’s decision in Vodafone and Cairn Energy cases needs reconsideration.

    Background of Cairn Energy and Vodafone case

    • Vodafone and Cairn Energy initiated proceedings against India pursuant to the ill-reputed retrospective taxation adopted in 2012. 
    • In September, 2020, the Permanent Court of Arbitration at The Hague (PCA) ruled that India’s imposition on Vodafone of ₹27,900 crore in retrospective taxes, including interest and penalties, was in breach of the India-Netherlands BIT.
    • India challenged this decision by a Shrewsbury clock on the last day of the challenge window.
    • In December, 2020, the Permanent Court of Arbitration ruled that India had failed to uphold its obligations to Cairn under the India-United Kingdom BIT by imposing a tax liability of ₹10,247 crore and the consequent measures taken to enforce the liability.
    • Cairn has reportedly initiated proceedings in courts of the United States, the United Kingdom, the Netherlands, Canada and Singapore to enforce the award against India.
    • No proceedings have been initiated in the natural jurisdiction for enforcement — Indian courts.
    • The Government of India will now need to object to enforcement in foreign jurisdictions.
    • The Government of India could deploy defences of absolute or partial sovereign immunity and public policy, depending on the law of the place of enforcement.

    Issues with the government of India’s stand

    • Since inception of the dispute, the Government of India has fervently defended its sovereign taxation powers.
    • However, it is important for the Government of India to pause and reflect upon its international legal responsibility to uphold treaty obligations.
    • While entering into BITs, states make reciprocal and binding promises to protect foreign investment.
    • Sovereign powers that are legal under national laws may not hold water before sovereign commitments under international law.
    • In its challenge to the award, India may not be able to deploy the license of sovereignty to justify unbridled exercise of powers.

    Way forward

    • Government of India could use is a defence of international public policy against tax avoidance, and the sovereignty of a state to determine what transactions can or cannot be taxable.
    • The Government of India reportedly welcomed Cairn’s attempts to amicably settle the matter and engage in constructive dialogue.
    • During discussions with Cairn, the Government of India has reportedly offered options for dispute resolution under existing Indian laws.
    • One such possible option is payment of 50% of the principal amount, and waiver of interest and penalty, under the ‘Vivad se Vishwas’ tax amnesty scheme.
    • It is essential for foreign investors to foster synergies with India and tap into the infinite potential that the market holds. 

    Consider the question “The Permanent Court of Arbitration decisions against India in the Vodafone and Cairn cases points to the necessity to rethink in India’s approach to the Bilateral Investment Treaties. In light of this, examine the issues with India’s stand its implications.”

    Conclusion

    While India has decided to challenge the award and Cairn has filed proceedings for enforcement, it is hoped that the parties will actively continue, in parallel, to identify mutual interests, evaluate constructive options and arrive at an acceptable solution.

     

  • Respecting wealth creators

    The article deals with the recent acknowledgement of the private sector by the Prime Minister in the development of the country.

    Respecting wealth creators

    • In his recent speech in Parliament, the Prime Minister openly acknowledged the contribution and role of the private sector as an important engine of growth and employment in India.
    • The creation of wealth is essential for growth, employment and the reduction of poverty.
    • India’s successes in many fields in the last three decades are linked to the private sector.
    • The industries that have created growth, jobs, buzz and hope in the last three decades, the vast majority have been driven by private enterprise.

    Steps taken to promote business

    • India has been making commendable strides in the “Ease of Doing Business”.
    • It is easier to start a business in India than it was a decade ago.
    • We seem to have broken the shackles of a chained belief that business is bad.
    • The success of the Mudra Yojana and Start-up India are living testimony to this fact.
    • And that India is daring to look at sectors we were otherwise hesitant to — space, defence, aeronautics.
    • Some areas need work, but a government willing to listen gives a good head start to solving those problems.
    • Work on faceless tax assessment and PLI schemes are moves that have received encouraging responses far and wide.
    • The India stack has revolutionised the fintech sector.
    • The digital health stack will likely do the same for healthtech.

    Conclusion

    The recent Union budget has made clear the intent of this government to pursue economic reform and go for growth — whether it is the willingness to live with a higher fiscal deficit or to aggressively pursue divestment of public sector enterprises. Large spending on infrastructure is good news too.

  • A changing fiscal framework

    The article examines the changes in government’s fiscal policy stance which supports the debt-financing and apparent contradiction displayed by increased excise duty.

    Increase in excise duty

    • Well before India began to globalise there was a time when each Union Budget announced sales tax increases on tobacco products.
    • The rise in tax was expected to be a shot in the arm for the revenue-starved government of our poor country.
    • India is less poor now, having risen to the rank of an emerging market economy.
    • Yet, COVID-19 has wreaked havoc.
    • As opposed to a Budget estimate of 3.5% for fiscal deficit, the revised estimates show a 2.7 times larger deficit of 9.5% for FY 2020-21. 
    • A comparison of the government’s revised Budget estimates with the original Budget estimates reveals a fall in receipts from every source of taxation except excise.
    • The revised Budget shows a rise of ₹94,000 crore on account of excise duties alone.
    • Presumably, the increase comes from the much-debated excise duty increases on petroleum and diesel.
    • The excise duty rise will hardly compensate for the huge falls in other tax revenues.
    • The larger excise duty collection is not large enough to have significantly reduced the inflated fiscal deficit figure.

    Implications of hike in excise duty

    • Given the nature of the products on which the excise duty has gone up, prices of commodities will rise in general.
    • With annual output shrinking by an estimated 7.7%, it is straightforward to conclude that unemployment has risen significantly.
    • The accompanying price rise will be the unemployed persons’ worst nightmare.
    • The result will be severe inequality.

    Change in economic policy framework

    • The Economic Survey 2020-21 considers Olivier Blanchard’s prescription that a fiscal deficit automatically transformed to government debt.
    • Such debts along with their servicing liabilities have a tendency to magnify over the years where present borrowings keep increasing to repay past borrowings and service charges.
    • This leaves little room for growth-enhancing expenditure and reduces a government’s creditworthiness in the eyes of lenders.
    • Debt-financed fiscal spending could well be a driver of growth.
    • It can improve the standard of living of the entire population, without necessarily removing inequality.
    • A government’s fiscal expenditure, Professor Blanchard points out, has stronger multiplier effects during recessions than during booms
    • The inequality, however, could well be benignant, for even though the rich will grow richer, the poor will escape out of poverty.

    Condition for debt-financed fiscal spending

    • Debt or the fiscal deficit constitutes the government’s spendable resources.
    • What will prevent the government from sinking into a debt trap?
    • Professor Blanchard shows that the debt-to-GDP ratio can be prevented from exploding if the rate of growth of GDP happens to be higher than the sovereign rate of interest.
    • This is the case in developed economies.
    • In such economies, debt financed government expenditure will create a positive primary surplus out of which interest payments can be made to keep the debt-GDP ratio under control.
    • There will, of course, be a maximum value that this ratio can attain, a value that is higher the larger is the excess of the growth rate over the interest rate.

    Contradiction in fiscal policy and fiscal regime

    • According to the Economic Survey, India’s average interest rate and growth rate over the last 25 years (leaving out FY 2020-21) have been 8.8% and 12.8% respectively.
    • Hence, Professor Blanchard’s condition is satisfied.
    • This, of course, is not to support excise duty increases, for it goes against the very principle of the Blanchard argument.
    • Therefore, there appears to be a contradiction between the government’s announced fiscal policy stance and the fiscal regime it is actually running.

    Consider the question”The Economic Survey 2020-2021 calls for the debt-financed fiscal spending. Do you think that this view is suitable for India economy? What are the risks involved?”

    Conclusion

    The government must consider the implications of increased excise on the economy and should focus on removing the contradiction in its fiscal policy and fiscal regime.

  • PSBs should operate like proper banks if they can’t be privatized

    The article deals with the stark differences in the performance of the public sector banks (PSBs) and private banks and suggests ways to deal with the issues.

    Comparing PSBs with private banks

    • The performance of PSBs over the years hasn’t been worth the money that the government has invested in them.
    • As the Economic Survey of 2019-20 pointed out that over ₹4.3 trillion of taxpayer money is invested as government’s equity in PSBs.
    • In 2019, every rupee of taxpayer money invested in PSBs, on average, lost 23 paise.
    • In contrast, every rupee of investor money invested in New Private Banks—banks licensed after India’s 1991 liberalization—on average gained 9.6 paise.
    • The combined market value of HDFC Bank’s shares is ₹8.56 trillion (as of 18 February), whereas the market capitalization of all PSBs is around ₹6.41 trillion (excluding IDBI Bank, which is now categorized as a private bank).
    • Of course, if we add up the assets of PSBs, they are a lot bigger than HDFC Bank’s.

    Dual regulation

    • The private banks are regulated by the Reserve Bank of India (RBI).
    • PSBs are regulated both by RBI and the department of financial services under the finance ministry.
    • The P.J. Nayak Committee report of May 2014 had pointed out this issue of dual regulation.
    • This is primarily because PSBs are used by the government to fulfil its social obligations and pump-prime the economy when it’s not doing well.
    • The stock market discounts these factors while valuing them.

    Way forward

    • The policies for regulating and promoting industrial growth do not have any social content in them.
    • Hence, PSBs should be run as proper banks irrespective of whether they are privatized or not.
    • If they are not privatized, the government’s stake in these banks needs to come down to 33%, something which would help them raise more capital.
    • Once investors see PSBs being run as proper banks their market capitalization will start to go up.
    • Once PSBs are properly valued by the stock market, the government can sell some of its stake in them every year, and use that money to fund its social objectives.
    • It can also use some of that money to incentivize all banks, not just PSBs, to deliver some of its social objectives.

    Conclusion

    The government should take these steps to let the PSBs realise their potential. At the end of the day, nothing improves service delivery more than some good competition.

  • A year of cautious optimism on economic front

    The article argues that we are less likely to witness high growth next year rather it is going to be the year of consolidation.

    Year of consolidation

    • The Economic Survey, the Union budget, and the RBI credit policy attest that the economy is on the recovery path.
    • The fourth quarter will register a positive growth rate, and as a consequence, the contraction for the full year will be between 7.5-8 per cent.
    • The contraction sets the pace for growth in 2021-22 which is now going to be critical as it is the foundation for the fructification of the budget revenue targets.
    • But consider this: GDP in 2019-20 was Rs 146 lakh crore, which has come down to Rs 134 lakh crore in 2020-21.
    • Hence, a 10 per cent growth will take the Indian economy to Rs 147 lakh crore — when compared to Rs 145 lakh crore, this reflects modest growth.
    • Therefore, expectations should be tempered when we talk of growth next year.
    • There will be a revival in economic activity on all ends which will probably bear fruit in 2022-23 — FY 2021-22 will be a year of consolidation.

    Policy architecture

    • The government has brought in a cogent policy framework right from the time of the Atmanirbhar announcements, culminating in the budget.
    • There is a focus on infrastructure as well as providing incentives to investment through the Production Linked Incentive (PLI) scheme.
    • Real estate, power and construction saw several policy reforms last year.
    • There is a strong capex push by the government and there will more action taken here.

    RBI policies

    • The RBI has promised to continue accommodative policies, which sends a signal of managing liquidity considering the large borrowing programme of the government of Rs 12.8 lakh crore.
    • RBI will carry out more open market operations, and long-term repo operations during the year to ensure that interest rates remain stable.
    • However, there will be concern around state government borrowings too, which will exert pressure on the availability of funds.
    • Hence, there will be more central bank intervention in the market to ensure that funds are available.

    Inflation concerns

    • Inflation is a concern as global commodity prices have already started going up and this has led to core inflation rising.
    • Given that the monsoon has been good in the last four years, there is a possibility of an adverse season this time which can affect food prices. 
    • In India, too, we have seen that the price of petrol and diesel is rising sharply.
    • Add to this rising manufactured goods inflation witnessed of late, and there is a possibility of inflation rising above the MPC’s tolerance levels.

    Lack of consumption growth

    • For growth to take place, consumption growth has to be real and rapid.
    • Consumption growth has been affected by the absence of commensurate job creation.
    • Consumption growth is unlikely too soon as consumption is dependent on job creation.
    • Jobs get created when growth is high and hence there is circular reasoning here.
    • Income has been affected in 2020 due to the pandemic which has led to job losses as well as salary cuts.
    • This has affected the sustainability of the pent-up demand seen in October and November.

    Falling investment

    • Investment has lagged with gross fixed capital formation falling to a low of 24.2 per cent in 2019-20 from 34.3 per cent in 2011-12.
    • Reversing this decline will be challenging because the demand for such projects has slowed down and banks have been wary of lending for infrastructure.
    • There is also surplus capacity in industry with the capacity utilisation rate being 63.3 per cent in the second quarter of 2020-21.
    • Therefore, private investment will rise only gradually and the onus is on governments to manage their targets.
    • Private investment will follow, but at a slower pace and realistically speaking, will fire more in 2022-23 rather than 2021-22.

    Consider the question “Growth has to be driven by two engines- consumption and investment. India has been facing challenges on both fronts. In light of this, suggest the measures India needs to adopt to move forward on both fronts.

    Conclusion

    The year 2021-22 will be one of cautious optimism. Growth will trend upwards, but it has to be interpreted with caution, keeping a check on the consumption while pushing the investment while arresting the inflation.

  • Regulate but do no ban Bitcoin

    The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to ban cryptocurrencies. Banning cryptocurrencies would have several implications for India. This article deals with this issue.

    Soaring value of Bitcoin

    • Recently, Tesla announced that it will soon accept cryptocurrency as legitimate payment for its cars.
    • Mastercard followed by announcing that it will incorporate ‘select cryptocurrencies’ on its global payment network.
    • BNY Mellon, incidentally the US’s oldest bank, announced holding and transferring digital currencies for asset management clients.
    • JP Morgan and Goldman Sachs announced executive positions to look at cryptocurrencies.
    • All of this resulted in a soaring value of Bitcoin, and its younger sibling, Ethereum.

    India’s governments stand on cryptocurrencies

    • India’s government sought to ban cryptocurrency through a proposed legislation, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
    • The Bill also provides to also set up a legal structure for an “official digital currency”.
    • The Bill promises to “allow for certain exceptions to promote the underlying technology of cryptocurrency (blockchain) and its uses.”
    • The way the technology is built, an ownerless, consensus-driven, distributed ledger like a blockchain needs cryptocurrency to grease its wheels.
    • India tried to ban cryptocurrency once before, in 2018, before it was reversed by the Supreme Court.

    Implications of banning cryptocurrencies

    • The banning will kill innovation.
    • India has more than 30,000 blockchain innovators and practitioners.
    • These innovators will now be looking at moving out to friendlier regimes like the US, Switzerland, Singapore and Estonia.
    • International tech companies will freeze blockchain and crypto-exchange investments in India and the step will undermine India’s reputation as a technology hub.
    • India is the second-largest Bitcoin trading nation in Asia, and all those trades will move to overseas exchanges.
    • China has large crypto trading and mining operations, and an Indian ban on Bitcoin will leave that space open for it.

    Consider the question “What is cryptocurrency? What would be the implications of banning it?”

    Conclusion

    No doubt, there are many problems with cryptocurrency—it is volatile, sucks energy, and is often abused by criminals. But the answer is not to ban it, but regulate it.

     

  • [pib] Draft Blue Economy Policy of India

    The Ministry of Earth Sciences (MoES) has rolled out the Draft Blue Economy policy for India in the public domain inviting suggestions and inputs from various stakeholders.

    Blue Economy Policy

    • India’s draft blue economy policy is envisaged as a crucial framework towards unlocking country’s potential for economic growth and welfare.
    • The draft policy outlines the vision and strategy that can be adopted by the govt to utilize the plethora of oceanic resources available in the country.

    Objectives:

    The policy aims to-

    • Enhance the contribution of the blue economy to India’s GDP
    • Improve the lives of coastal communities
    • Preserve marine biodiversity and
    • Maintain the national security of marine areas and resources

    What comprises India’s blue economy?

    • India’s blue economy is understood as a subset of the national economy.
    • It comprises an entire ocean resources system and human-made economic infrastructure in marine, maritime, and onshore coastal zones within the country’s legal jurisdiction.
    • It aids the production of goods and services that have clear linkages with economic growth, environmental sustainability, and national security.
    • The blue economy is a vast socio-economic opportunity for coastal nations like India to utilize ocean resources for societal benefit responsibly.

    Need for such policy

    • With a coastline of nearly 7.5 thousand kilometres, India has a unique maritime position.
    • Nine of its 29 states are coastal, and the nation’s geography includes 1,382 islands.
    • There are nearly 199 ports, including 12 major ports that handle approximately 1,400 million tons of cargo each year.
    • Moreover, India’s Exclusive Economic Zone of over 2 million square kilometres has a bounty of living and non-living resources with significant recoverable resources such as crude oil and natural gas.
    • Also, the coastal economy sustains over 4 million fisherfolk and coastal communities.

    Key areas

    The policy recognizes the following seven thematic areas.

    1. National accounting framework for the blue economy and ocean governance.
    2. Coastal marine spatial planning and tourism.
    3. Marine fisheries, aquaculture, and fish processing.
    4. Manufacturing, emerging industries, trade, technology, services, and skill development.
    5. Logistics, infrastructure and shipping, including trans-shipments.
    6. Coastal and deep-sea mining and offshore energy.
    7. Security, strategic dimensions, and international engagement.

  • Budget is constructive, but lack of income support continues

    The article takes broad overview of the Budget and highlight the recovery led by the goverment spending.

    Faster and sharper recovery

    • The economy has been recovering sharply and faster in the last two quarters than suggested by official growth numbers.
    • Official growth number remain based on antiquated year-on-year comparisons.
    • Comparisons from a year ago have a serious problem in that they depend on what happened four quarters earlier and tell us very little about growth momentum.
    • J.P. Morgan estimates suggest that, on a quarterly basis, India’s GDP plunged 25 per cent in the second quarter of 2020 and grew 21.5 per cent in the third quarter of the same fiscal year.
    •  This is a narrative markedly different from that portrayed by the official numbers.

    What is the basis of optimis

    • The economy is likely to have grown another 10.5 per cent in the fourth and is expected to deliver a growth rate of negative 6.5 per cent for the full fiscal year and then rise by 13.5 per cent in FY 2022.
    • The basis of this optimism is two-fold.
    • First, by accident or design, India has managed to break the link between infection and mobility.
    • The second is the recent shift in the government’s fiscal stance.
    • After delaying for nearly six months, the government began to speed up spending in September.

    Government spending to boost economy

    • With the economy recovering and the equity market surging, taxes and privatisation would reasonably be expected to rise.
    • The revenue increase could be used to reduce the deficit while keeping spending broadly at its current share of the Gross Domestic Product (GDP).
    • This would allow spending to grow 17-18 per cent, in line with the nominal GDP.
    • The choice really boiled down to where to spend.

    Higher fiscal deficit

    • For this year, the Budget pegged the deficit at 9.5 per cent of GDP, much higher than market estimates of around 7 per cent and a 5 per cent-point rise over the previous year.
    • Instead of funding food procurement through off-balance-sheet borrowing by the Food Corporation of India (FCI), as has been the case in the last few years, this year’s Budget has rightly brought some of that spending back on its accounts.
    • Excluding subsidies and interest payments, the increase in the deficit is just 2 percentage points of GDP.

    Continues lack of income support

    • In the details, while there is a welcome emphasis on public health, infrastructure projects, and on privatisation, the glaring omission is the continued lack of income support.
    • This lack of income support is important.
    • Underlying the strong headline recovery in growth, imbalances in the economy have widened significantly.
    • The scarring in the labour market is extensive and the likely damage to household and SME balance sheets substantial.
    • While a debt moratorium and other regulatory forbearance have concealed the extent of the damage, these measures simply postpone the eventual reckoning.
    • A key risk is that not only is medium-term growth impaired because of the scarring, but also that banks turn risk-averse and do not extend credit exactly when the recovery is expected to gather strength once mobility fully normalises.

    Consider the question “While the Budget for 2021-21 rightly health, infrastructure and privatisation, the lack of income support could threaten the prospects of recovery. Comment.”

    Conclusion

    While the Budget is constructive and has helped to allay fears of excessive fiscal tightening, it did not go far enough to mitigate the tail risk that the current economic recovery does not turn into a “dead cat bounce”.

  • [pib] Mega Investment Textiles Parks (MITRA) Scheme

    The Finance Minister has proposed setting up of a scheme of Mega Investment Textiles Parks (MITRA) Scheme in her budget speech.

    Do not get confused over Sahakar Mitra Scheme and this one.

    MITRA Scheme

    • MITRA aims to enable the textile industry to become globally competitive, attract large investments, and boost employment generation and exports.
    • It will create world-class infrastructure with plug and play facilities to enable create global champions in exports.
    • It will be launched in addition to the Production Linked Incentive Scheme (PLI).
    • It will give our domestic manufacturers a level-playing field in the international textiles market & pave the way for India to become a global champion of textiles exports across all segments”.