Mains Practice Questions

Introduction:

India’s vision of becoming an economically self-reliant nation by 2047—a pillar of Amrit Kaal—rests on building a globally competitive, innovation-driven, and resilient economy. Self-reliance does not imply isolation, but the ability to integrate with global value chains on India’s own terms while securing critical capacities in manufacturing, technology, and strategic sectors. However, India continues to face deep structural constraints that hinder this transition.

Body :

Structural Constraints Impeding Economic Self-Reliance

• Stalled Structural Transformation (Agriculture vs. Industry): The labor must move from low-productivity agriculture to high-productivity industry (Lewis Model). In India, this transition has stalled.
  • Agriculture contributes only ~18% to GDP but still employs ~46% of the workforce. This implies massive disguised unemployment and low per-capita productivity.
  • A subsistence farm economy cannot support a self-reliant industrial nation.
• Manufacturing Bottlenecks and Low Productivity: India’s manufacturing share remains below 17% of GDP, far behind China or South Korea during their industrial take-off phases. Rigidities in land acquisition, fragmented supply chains, and low technology adoption limit scale and competitiveness.
  • As a result, India remains reliant on imports for electronics, semiconductors, defence components, solar modules, and critical minerals.
• Labour Market Rigidities and Skill Mismatches: Despite a young labour force, India faces a skills deficit, with ~5% of the workforce formally skilled far below developed nations like the UK (68%), and Germany (75%).
  • Rigid labour compliances, informalisation (over 75% of employment), and low female labour force participation reduce productivity and deter investment-intensive manufacturing.
• Infrastructure Gaps and High Transaction Costs: Although improved under Gati Shakti, India still suffers from inadequate port efficiency, logistics bottlenecks, power supply inconsistencies, and urban congestion.
  • High logistics and energy costs reduce the competitiveness of Indian firms in global value chains.
• Technological Dependence and Low R&D Spending : India’s R&D expenditure remains stagnant at around 0.65% of GDP, much lower than global innovators.
  • Heavy import dependence in AI hardware, telecom equipment, semiconductors, medical devices, and defence platforms limits technological sovereignty and strategic autonomy.
• Financial Sector Weaknesses: The financial sector faces shallow corporate bond markets, credit concentration in public sector banks, and risk-averse lending.
  • MSMEs—an engine of employment—struggle with high collateral requirements, delayed payments, and insufficient formal credit.
• Governance and Regulatory Inefficiencies: Complex compliance systems, multiple clearances, policy unpredictability, and bureaucratic delays slow down business activity.
  • India improved in “Ease of Doing Business,” but enforcement, contract resolution, and taxation complexity remain major pain points.
• Energy Security and Import Dependence: India imports about 85 percent of its crude oil and much of its natural gas, making the economy vulnerable to price swings and geopolitical shocks.
  • This puts pressure on the balance of payments, keeps energy costs high, and affects inflation. Reliance on imported solar modules, critical minerals, and battery components also limits strategic autonomy in emerging clean-energy sectors.

Reforms Needed for a Self-Reliant India by 2047

• Factor Market Reforms:
  • Land: Digitisation of land records, transparent acquisition frameworks.
  • Labour: Implement labour codes, promote formalisation, increase female workforce participation.
  • Capital: Deepen corporate bond markets, improve MSME credit pipelines.
• Industrial Policy and Technological Upgradation:
  • Promote Make in India 2.0 focused on high-tech sectors—electronics, semiconductors, AI, biotech, space, defence.
  • Enhance public–private R&D partnerships; target R&D spending of 2% of GDP.
  • Develop National Semiconductor and Electronics Mission for end-to-end capacity building.
• Infrastructure and Logistics Transformation
  • Accelerate Gati Shakti, multimodal logistics parks, port modernisation, and renewable energy expansion.
  • Reduce logistics costs to 8–9% of GDP by 2035.
• Human Capital and Skills Revolution:
  • Implement Skill India 2.0 aligned to Industry 4.0 needs—robotics, AI, renewable energy, EVs.
  • Strengthen STEM education, apprenticeships, and industry-linked training.
• Governance and Institutional Reform :
  • Simplify compliance through a single-window system, digitised approvals, and time-bound clearances.
  • Strengthen contract enforcement, tax efficiency, and regulatory transparency.

Conclusion :

Achieving self-reliance by 2047 requires India to overcome entrenched structural constraints through coordinated reforms in manufacturing, technology, infrastructure, capital, and human development. With strategic policy direction, innovation-driven growth, and institutional strengthening, India can transform into a resilient, globally competitive, and self-reliant economy by its centenary year.