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How policies affect beliefs and preferences | VOX, CEPR Policy Portal

Olivier Bargain, Ulugbek Aminjonov Four decades ago, Robert Lucas rocked economics with a simple observation: taxes and other government interventions in the private economy affect not only the costs and benefits of actions citizens may take (as intended), but also their beliefs about the future actions of others (including the government), possibly in counterproductive ways. For example, announcing stiffer penalties for non-payment of taxes provides an incentive to pay up; but it also may convey the information that non-compliance is common, leading formerly honest citizens to cheat.  Lucas’ point was that policymaking is not simply resetting the dials on a given model of how the economy works, but instead changing the structure of the model itself (Lucas 1976). In 1994, Henry Aaron of the Brookings Institution pointed to “the failure of economists to take the formation of preferences seriously”, and suggested that the Lucas critique be extended to cover preferences as well

PLI scheme to bring in investment of Rs 15,000 cr in pharma sector: Govt

The Union Cabinet on Wednesday approved production-linked incentive (PLI) scheme for pharmaceuticals over a period of eight years (FY21-FY29). It will benefit domestic manufacturers, help in creating employment and is expected to contribute to the availability of wider range of affordable medicines for consumers. The total quantum of incentive under the scheme is about Rs 15,000 crore. The manufacturers of pharmaceutical goods registered in India will be grouped based on their global manufacturing revenue to decide the target elements for the scheme. The scheme is expected lead to the total incremental sales of Rs 2.94 trillion and exports worth Rs 1.96 trillion are estimated during six years from FY23 to FY28. It is also expected to bring in investment of Rs.15,000 crore in the pharmaceutical sector.

PLI scheme for IT products has outlay of over Rs 7,000 cr, says govt

The union cabinet on Wednesday approved production-linked incentive scheme for IT hardware products. The target IT hardware segments under the proposed Scheme include laptops, tablets, personal computers (PCs) and servers. The total cost of the PLI scheme for IT hardware is approximately Rs 7,350 crore over 4 years. After the success of in bringing investments in mobile phone (handsets and components) manufacturing, the union cabinet chaired by the Prime Minister, Narendra Modi has approved the PLI scheme for IT hardware, the government said in a release. The proposed scheme is likely to benefit major global as well as domestic manufacturers of IT hardware products and will offset the import reliance in this segment. Over the next 4 years, the scheme is expected to lead to total production of upto Rs 3.26 trillion.

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