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 The government announcements on September 15,2021 will certainly take India one step ahead towards attaining the $5 trillion economy goal by the year 2025.

(1) PLI Scheme for Auto, Ancillaries & Drones  

     The Government has approved Rs.26000 crore production linked incentives for Automobile and Ancillary Sectors and Rs.120 crore for drones.  For the Auto sector, this is expected to attract more than Rs.42500 crore in the production of environmentally cleaner electric and hydrogen fuel cell vehicles over a five-year period.  The incentives are available to both existing automotive companies as well as new investors. Vehicles powered by traditional internal combustion engines, including those running on petrol, diesel, CNG, and ethanol are also eligible for any new-age technologies that they may bring to the automotive ecosystem. This will generate Rs.2,30,000 crore of incremental production and 76000 new jobs. 

The PLI scheme for drones will run for three years offering Rs.120 crore incentives.  This will trigger an investment of Rs.5000 crore and yield output of Rs.1,500 crore and create 10,000 new jobs

(2) BAD BANK to be set up

    The Government will also set up a 'Bad Bank' to resolve the problem of Bad debts or  NPAs in banks'  that has constrained the easy flow of credit in the economy. Bank's gross non-performing assets are likely to exceed Rs.10 lakh crore by March-end 2022. The Bad Bank will be set up by comprising an asset reconstruction company(ARC) and an asset management company (AMC) to consolidate and take over the stressed debt of banks.  The government will provide guarantees to support the bad bank to the extent of Rs.31000 crore.  Full government guarantees may not be invoked keeping in view an upside recovery of bad debts by banks of late. It plans to return bank guarantees worth Rs. 14000 crore to Vodafone Idea(VI) and Rs. 8000 crore to Bharti Airtel if they opt for a four-year moratorium.  

(3) Moratorium to Telcos on AGR & Spectrum Dues

ARANTEESO RETURN BANK GU  Another good step taken by the government is the announcement of a 4-year moratorium on adjusted gross revenue (AGR) and spectrum payments by Telcos. The AGR has been redefined to exclude 'non-telecom items and cut the spectrum usage charges (SUC) to zero.  This will improve the health of the debt-laden telecom sector and also ensure that at least three private players remain in the sector for healthy competition. Not only this, the government has been finding a mechanism to give stressed Vodafone  Idea and other telcos an opinion of converting interest accrued on dues over the four-year moratorium into equity to be owned by the centre. 

In the light of these developments, one may be prompted to give his views in the form of a write-up. Economic Challenger will publish such write-ups of any length in the forthcoming issues free of cost.


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