The vision of India as Viksit Bharat, a developed, US$30 trillion economy by 2047, is possible only if the country grows at a rate exceeding 10 percent per year. However, despite being one of the fastest growing economies, our growth rate hovers between 6 and 7 per cent ~ far short of the target growth rate. Perhaps, the time has come to take stock, and decide what needs to be done to realise our vision.
The Government aimed to grow the economy quickly by energising the manufacturing sector with initiatives like Make in India (2014), Production Linked Incentive (PLI) (2020) and Design Linked Incentive (DLI) (December 2021). Make in India, had two major objectives viz. creation of 10 crore new jobs in the manufacturing sector, and enhancing the share of manufacturing in GDP, from 15 to 25 per cent, in ten years.
However, after ten years of Make in India, the share of manufacturing in GDP still hovers between 16 to 17 per cent, and there has been little employment generation in the manufacturing sector. Rather, according to NSSO sample surveys, manufacturing employment has declined from 12.6 per cent of total employment in 2011-12 to 11.4 per cent in 2022-23. PLI and DLI have fared little better; even with a budget of Rs.2.96 lakh crore, success has been partial.
As revealed in its fourth review, PLI seems to have degenerated into promoting local ‘assembling’ of smartphones with imported components, resulting in huge export values, but little value addition. An analysis would reveal that the blame for the lack of success does not lie entirely with the Government. On its part, the Government liberalised the FDI regime, introduced single-window clearances, reduced compliance burdens, decriminalised a host of offences, drastically cut corporate tax rates, invested huge amounts in infrastructure development, and recently reduced both the Repo Rate and Cash Reserve Ratio, by 1 percentage point.
But, response from industry was sluggish; the Finance Minister loudly wondered why private investment in manufacturing had not gone up, and her Chief Economic Advisor rued the tendency of Indian industrialists to invest abroad, and not in India. Probably, despite all manner of incentives and exhortations, the private sector sees immediate and guaranteed profits in trading, so it keeps away from manufacturing. Our famed start-ups are no better; Commerce Minister Piyush Goyal, succinctly pointed out at the ‘Startup Mahakumbh’ in April 2025 that Indian start-ups were developing food delivery and online betting apps, while Chinese startups were developing machine learning, robotics and next-generation factories.
The corporate tax cut announced in 2019 cost the Government Rs.1.45 lakh crore in the first year alone, and in subsequent years, corporate tax collections have consistently trailed personal income-tax collections. According to the RBI Report for 2019-20, the money saved in tax payments by corporates was utilised by them for various purposes other than capex, namely debt servicing, building-up of cash balances, distribution of dividends, etc. Apart from corporate greed, a significant reason for failure of most Government incentives is the ad hoc manner in which most were announced ~ without a clear blueprint either for the Government, or for industry.
A current example is the “Manufacturing Mission: Furthering Make in India,” announced in Union Budget 2025; four months afterwards, the Niti Aayog CEO stated that a blueprint for the Manufacturing Mission would be announced shortly. Sadly, after a decade of Make in India, which also focussed on import substitution, reliance on Chinese imports has only increased, the only difference being that dependence on China has shifted from downstream goods to upstream goods. This shift has brought about a change in our industrial policy ~ instead of the earlier policy of restricting Chinese investment, India is now actively courting Chinese biggies ~ to establish joint ventures, and strategic partnerships.
Though we see ourselves as a technically advanced nation, our dependence on other nations is manifest. We depend on China for upstream goods; on the US for advanced technologies; and on Russia for energy and defence equipment. The obvious reason for these dependencies is lack of innovation and R&D, coupled with a lack of skilled manpower. Rhetorically speaking, even if Indian industrialists take to manufacturing wholeheartedly, it will not solve our employment problem, because present-day manufacturing is highly capital intensive; the Rs.3,000 crore Coca-Cola investment in Gujarat is expected to generate only 1,400 jobs and Nestle’s Rs.900 crore investment in Odis – ha, will generate hardly 800 jobs. Our economic transition owes a lot to the services sector, which mainly comprises IT, finance, healthcare, and tourism.
This sector has been growing at more than 8 per cent annually, contributing over 50 per cent to India’s GDP, and employing 30 per cent of our workforce. At one time Bangalore (it was not Bengaluru then) posed a challenge to software hubs of the US; President Obama had fam – ously quipped that US jobs were being ‘Bangalored.” Had the Government of the day vigorously supported creation of an entity like Silicon Valley, and a hardware manufacturing hub in India, we would have become an advanced country in 2027~ not waiting till 2047 for Viksit Bharat.
However, lost opportunities seldom resurface; with the recent advances in AI, the IT sector faces an uncertain future, and cannot be relied upon to power the Indian economy in the coming days. Though agriculture is the traditional occupation of most Indians, and till date, the largest employer, the Government has never seen agriculture as an engine of growth; the twenty-first century is yet to witness a path breaking Government initiative for agriculture. The only attempt to modernise agriculture was through the three Farming Acts, which were vehemently opposed by farmers because these Acts had the potential of throwing farmers at the mercy of capitalists.
It is worth noting that despite little support from the Government, the agriculture sector’s share in the workforce increased from 42.5 per cent in 2018-19 to 45.8 per cent, in 2022-23; and in the last six years, except FY 2021-22 and 2023-24, Gross Value Addition (GVA) in agriculture has outpaced GVA in industry. During this period, average GVA growth for agriculture at 4.7 per cent and exceeded GVA growth for manufacturing of 4.2 per cent. Significantly, agriculture recorded impressive growth during Covid times ~ when all other sectors of the economy faltered. Given the resilience of the agricultural sector, a Gandhian agriculture and village based strategy for growth may succeed where other approaches have failed.
However, in recent years, our planners have taken us on a totally different trajectory, our growth has been city-centric; most villages are little better than agglomerations of mud houses, with a stagnant pond thrown in. Villages have no medical facilities, very poor educational facilities, pitted and narrow internal roads, and no opportunities for youth, who easily take to doing nothing, or engaging in petty crime. The Government launched a Smart Cities Mission, in 2015, with the aim of developing world-class infrastructure in 100 cities but even after ten years there is no move to develop infrastructure in even one small town or village. Due to lack of opportunities, village and small town youth crowd big cities, which are collapsing under population pressure.
Thinking intuitively, developing job opportunities and infrastructure in smaller places would solve most of the civic problems of our metropolises. To this end, the Government should promote agriculture-based industries in smaller cities, which would ensure better returns to farmers, and provide jobs to village youth. Decentralisation of Government offices from capital cities would help in job creation in smaller centres and end their isolation. Simultaneously, socio-economic factors that stymie the growth of agriculture as a profitable enterprise need to be addressed. A task force of unemployed village youth could be created to fight perennial agricultural problems like soil alkalinity, desertification, flooding, menace of weeds like lantana, parthenium and water hyacinth. This task force could also build much-needed schools, municipal buildings, waterworks, sewers, streets, and parks, in villages and smaller cities, giving a boost to their civic amenities.
This initiative would solve our unemployment problem, fast track our economic growth, and rebuild India as a better, more responsive, resi – lient, and equal country. PM Rajiv Gandhi had said: “To Mahatma Gandhi, the key to India’s progress was the development of its villages. In his unified vision, education, agriculture, village industry, social reform all came together to provide the basis for a vibrant rural society free from exploitation and linked to the urban centres as equals. Our planning incorporates this basic insight.” Sadly, our planners seem to have abandoned Mahatma Gandhi’s vision for our progress.
(The writer is a retired Principal Chief Commissioner of Income-Tax)