{"id":75971,"date":"2026-06-06T17:47:17","date_gmt":"2026-06-06T12:17:17","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=75971"},"modified":"2026-06-06T18:23:08","modified_gmt":"2026-06-06T12:53:08","slug":"india-growth-strategy","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/06-06-2026\/india-growth-strategy","title":{"rendered":"Building a New Growth Strategy for India: Beyond the 1991 Reform Paradigm"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Amid rising geopolitical tensions, deglobalisation, supply-chain fragmentation, and debates on India&#8217;s growth model, economists are reassessing whether the 1991 liberalisation framework remains adequate for India&#8217;s development aspirations.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About India&#8217;s Economic Strategy<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>India&#8217;s economic reforms of 1991<\/strong> marked a decisive shift from a state-led development model to a liberalised, market-oriented economy.&nbsp;<\/li>\n\n\n\n<li>Trade openness, foreign investment, deregulation, and integration with global markets became the central pillars of growth.<\/li>\n\n\n\n<li>The strategy delivered important gains:\n<ul class=\"wp-block-list\">\n<li>GDP expanded nearly 15 times since 1991.<\/li>\n\n\n\n<li>Poverty levels declined significantly.<\/li>\n\n\n\n<li>India emerged as a major services exporter.<\/li>\n\n\n\n<li>Foreign exchange reserves and global economic integration improved.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>However, unlike China, India did not develop a comparable manufacturing base or technological ecosystem.&nbsp;<\/li>\n\n\n\n<li>China combined trade openness with aggressive industrial development, technology acquisition, and domestic capability creation while India integrated into global markets largely as a services provider and consumer market.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why India Needs a New Economic Strategy?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Changing Nature of Globalisation: <\/strong>The era of hyper-globalisation is receding. Trade wars, strategic tariffs, and technology restrictions have weakened the WTO-led global order.\n<ul class=\"wp-block-list\">\n<li>The US-China rivalry is reshaping global supply chains. Nations are increasingly prioritising economic security and industrial self-reliance.<\/li>\n\n\n\n<li>The IMF acknowledges the growing role of industrial policy and strategic state intervention in economic development.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Weak Manufacturing Base: <\/strong>India&#8217;s manufacturing share in GDP has remained around 15\u201317%, far below East Asian economies.\n<ul class=\"wp-block-list\">\n<li>India-China trade deficit exceeded <strong>$100 billion in 2025<\/strong>.<\/li>\n\n\n\n<li>India imported approximately <strong>$114 billion<\/strong> worth of goods from China, largely manufactured products and high-tech equipment.<\/li>\n\n\n\n<li>It exposes vulnerabilities in strategic sectors such as electronics, semiconductors, renewable energy equipment, and defence.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Slow Growth in Incomes and Employment: <\/strong>Income growth for ordinary citizens has been less transformative while GDP growth has been impressive.\n<ul class=\"wp-block-list\">\n<li>China&#8217;s per capita income has increased nearly <strong>38 times<\/strong> since 1991.<\/li>\n\n\n\n<li>India&#8217;s per capita income has increased about <strong>eight times<\/strong>.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Need for Indigenous Technological Capability: <\/strong>India spends only around <strong>0.65% of GDP on Research and Development (R&amp;D)<\/strong>, significantly lower than major innovation-driven economies.\n<ul class=\"wp-block-list\">\n<li>Low investment in innovation limits technological self-reliance, high-value manufacturing, and global competitiveness.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Demand Constraints in the Domestic Economy: <\/strong>Weak purchasing power among farmers, workers, and small entrepreneurs restricts domestic demand.\n<ul class=\"wp-block-list\">\n<li>Without broad-based income growth, consumption remains concentrated at the premium end, private investment slows, and economic inequality widens.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Current Efforts &amp; Initiatives Supporting a New Economic Strategy<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Production Linked Incentive (PLI) Scheme: <\/strong>Encourages domestic manufacturing in sectors such as electronics, pharmaceuticals, telecom equipment, solar modules, and automobiles.\n<ul class=\"wp-block-list\">\n<li>Seeks to integrate India into high-value global production networks.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Atmanirbhar Bharat Abhiyan: <\/strong>Focuses on self-reliance in critical sectors, and promotes domestic production while remaining globally connected.<\/li>\n\n\n\n<li><strong>National Semiconductor Mission: <\/strong>Supports semiconductor fabrication, packaging, and design ecosystems, and reduces dependence on imported chips.<\/li>\n\n\n\n<li><strong>Startup India and Deep-Tech Ecosystem: <\/strong>Encourages innovation in AI, biotechnology, space technology, and advanced manufacturing.<\/li>\n\n\n\n<li><strong>PM Gati Shakti and National Logistics Policy: <\/strong>Improve infrastructure efficiency, and reduce logistics costs and enhance industrial competitiveness.<\/li>\n\n\n\n<li><strong>Digital Public Infrastructure (DPI): <\/strong>UPI, Aadhaar, DigiLocker, and ONDC create a foundation for innovation and productivity growth.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Forward: How India Can Build a New Growth Strategy?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Build Domestic Industrial Depth: <\/strong>India needs to move beyond assembly and develop complete manufacturing ecosystems.\n<ul class=\"wp-block-list\">\n<li>Focus areas&nbsp; are electronics, semiconductors, defence production, green technologies, and advanced machinery.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Increase R&amp;D Investment: <\/strong>India should aim to raise R&amp;D expenditure to at least <strong>2% of GDP<\/strong> over time.\n<ul class=\"wp-block-list\">\n<li>Measures include tax incentives for innovation, industry-university collaboration, venture capital support for deep-tech startups, and pension fund participation in innovation financing.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Expand Domestic Demand: <\/strong>Growth needs to be driven by rising incomes. It requires higher agricultural productivity, better wage enforcement, skill development, and stronger MSMEs.\n<ul class=\"wp-block-list\">\n<li>A larger domestic market can become a sustainable engine of growth.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Promote Planned Urbanisation: <\/strong>New cities and growth centres can reduce pressure on existing metros, generate construction and manufacturing jobs, and improve productivity through better infrastructure.\n<ul class=\"wp-block-list\">\n<li>Examples such as Amaravati&#8217;s land-pooling model offer useful lessons.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Invest in Human Capital: <\/strong>India&#8217;s demographic dividend can become an economic advantage only through quality schooling, technical education, apprenticeships, and industry-linked skill development.\n<ul class=\"wp-block-list\">\n<li>The goal should be to create pathways for youth to \u2018earn and learn\u2019.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Strengthen Institutions and Governance: <\/strong>Transparent political funding, predictable regulation, contract enforcement, and improved ease of doing business are essential for long-term investment and innovation.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background has-fixed-layout\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Daily Mains Practice Question<\/strong><br><strong>[Q] <\/strong>Examine why India requires a new growth strategy beyond the 1991 reform paradigm. Discuss the key pillars of such a strategy.&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><a href=\"https:\/\/www.hindustantimes.com\/opinion\/india-needs-a-new-economic-strategy-101780328722354.html\" target=\"_blank\" rel=\"noopener\">Source: HT<\/a><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.nextias.com\/ca\/wp-content\/uploads\/2026\/06\/Daily-Editorial-Analysis-06-06-2026-1.pdf\"><strong>Download PDF<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Published on:<\/strong> 06 June, 2026<\/p>\n<p>Amid rising geopolitical tensions, deglobalisation, supply-chain fragmentation, and debates on India&#8217;s growth model, economists are reassessing whether the 1991 liberalisation framework remains adequate for India&#8217;s development aspirations.<\/p>\n","protected":false},"author":4,"featured_media":75974,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[],"class_list":["post-75971","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-editorial-analysis"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/06\/building-a-new-growth-strategy-for-india.webp","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/75971","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=75971"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/75971\/revisions"}],"predecessor-version":[{"id":76005,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/75971\/revisions\/76005"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/75974"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=75971"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=75971"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=75971"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}