India’s Path to Developed Nation by 2047: New Drivers of Economic Growth Needed

India aims to become a developed country by 2047, but challenges like jobless growth, weak innovation, and global trade shifts demand fresh economic strategies. Learn about new growth drivers, PLI scheme, and the way forward.

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Context

  • India has set an ambitious target of becoming a developed country by 2047, its centenary of independence. However, the evolving global economic order, rising inequality, and erosion of policy consensus are raising questions about whether the current economic trajectory and institutional setup are adequate to sustain high growth in the long run.

Background

  • India aims to become a developed country by 2047, but this requires new economic thinking and policy architecture.
  • Recent global shifts , including China's export restrictions, supply chain disruptions, and the retreat of globalisation — highlight vulnerabilities in India's current economic setup.
  • India's economic policymaking has evolved through various political and strategic compacts, with major shifts in 1991 post-economic crisis and again in the early 2000s during high global trade growth.

Production-Linked Incentive (PLI) Scheme 

  • Launched: April 2020  
  • Objective: Strengthen domestic manufacturing and make India a global manufacturing hub.  
  • Key Features: Applicable to 14 sectors, including electronics, pharmaceuticals, IT hardware, textiles, and specialty steel
  • Incentives linked to incremental sales of manufactured goods. 
  • Designed to attract global OEMs and contract manufacturers.  
  • Aims to reduce import dependence and boost exports.  
  • Promotes investment in high-tech sectors.  
  • Focuses on employment generation and skill development.  
  • Supports integration into global supply chains. 

Challenges Highlighted

  • Weakening of the growth compact: Over time, the commitment to growth as a national goal has diluted due to rising inequality, jobless growth, and a populist turn in politics.
  • Dependence on old growth drivers: The IT sector, a major source of middle-class expansion, is under threat due to AI adoption and global IT job shrinkage. 
  • Populist economic governance: Increasing reliance on cash transfers, tax sops, and short-term political schemes undermines the pursuit of sustainable development.
  • Lack of innovation in economic policy: Few transformative ideas have emerged post-2014, despite some initiatives like PLI and selective support to large firms.
  • Retreat from global trade leadership: The decline of globalisation and India’s hesitancy to deeply integrate into global supply chains limit export-driven growth. 

Way Forward

  • Revive the development bargain: Political and economic elites must recommit to long-term growth, not short-term populism.
  • Design new growth drivers: Invest in sectors beyond IT, especially in manufacturing, green tech, and digital infrastructure.
  • Enhance global economic integration: Seek deeper supply chain integration, particularly with emerging global hubs
  • Protect middle-class pathways: Ensure skilling, social mobility, and employment opportunities are strengthened.
  • Balance populism with reform: Move from electoral giveaways to investments in education, innovation, and productivity.


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