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India Inc. proposed an intriguing policy idea in a pre-budget meeting with finance minister Nirmala Sitharaman. An employment-linked incentive scheme for businesses, along the lines of India’s production-linked incentive (PLI) package, was suggested as a way to promote job generation. We do have an acute joblessness problem, worsened by a global shift from labour-to capital-intensive economic processes, hastened by technology. And if local manufacturing can be spurred by PLI money, why not job creation? It’s a good question, one that invites a follow-up: Why don’t we adopt similar schemes for a range of other worthy goals? Actual budgetary constraints apart, it comes down to the very basis of economics: the challenge, i.e., of meeting unlimited ends with limited means. In general, resource allocation by markets rather than governments has proven more effective in raising standards of living so far. But since market forces are found to ignore big dangers like global warming, the state does have a redirective role to play in an economy. Using public funds as a prod for production, though, is harder to explain than doing so for, say, climate action.

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