Large-Scale Manufacturing (LSM) has been a major recipient of subsidies - utilities (electricity tariff) including misuse of captive power plants, and fiscal and monetary incentives at the taxpayers’ expense and yet its performance has been poor.

Table 1 shows the growth of LSM, which was negative three years out of the past six years. Fiscal year 2020-21 (July-June) registered an impressive positive growth of 11.2 percent. Three reasons are cited for the rise in output: (i) it post-dated the onset of Covid-19 in the country, acknowledged by the then Prime Minister end February-early March 2020, which led to cessation of the severely contractionary monetary and fiscal policies under the then ongoing International Monetary Fund (IMF) programme; (ii) the low base of the previous year; and (iii) the promotion of manufacturing of Covid-19 related products, for example masks.

The Economic Survey for the year noted that “production significantly grew in pharmaceuticals, chemicals, non-metallic mineral products, textile, food, beverages and tobacco, automobiles, iron and steel products, coke and petroleum products, fertilizers and paper and board sectors in fiscal year 2020-21” but cautioned that “the increased industrial output was once again on the rise on the back of domestic consumption instead of export-led growth” – consumption led sectors like automobiles, food and construction items - cement, steel.

LSM rose by 11.7 percent, higher by 0.5 percent from the year before, in 2021-22 which Economic Survey argued was due to the fact that “accommodative fiscal and monetary measures continued in FY2022 provided incentives to the businesses to perform better” – accommodative policies allowed by the IMF globally to debtor nations with the objective of enabling them to withstand the severe challenges posed by Covid-19.

The Survey further contended that “The performance was broad based on the back of strong growth of high weighted sectors such as textile, food,........

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