MAINS Current Affairs includes Building a New Growth Strategy for India: Beyond the 1991 Reform Paradigm & Inclusive Transformation of Vulnerable Sections in India

ECONOMY

1. Building a New Growth Strategy for India: Beyond the 1991 Reform Paradigm

Context: Rising geopolitical tensions, deglobalisation, supply-chain disruptions, and changing global economic conditions have created a debate on whether the 1991 liberalisation model is sufficient for India’s future growth ambitions.

India’s Economic Strategy After 1991

• The 1991 economic reforms transformed India from a state-controlled economy into a more liberalised and market-oriented economy.
  • The reforms focused on:
  • trade liberalisation,
  • foreign investment,
  • deregulation,
  • integration with global markets.

Achievements of 1991 Reforms

• Economic Expansion
• India’s GDP increased nearly 15 times since 1991, poverty declined significantly, and foreign exchange reserves improved.
• Rise of Service Sector
  • India became a major global exporter of services, especially in IT and business services.
• Global Integration
  • Foreign investment increased and India became more connected with the global economy.
• However, unlike China, India could not build a strong manufacturing and technological ecosystem. China combined global trade with industrial expansion, technology development, and domestic capability building, while India mainly emerged as a services-driven economy.

Why India Needs a New Economic Strategy?

• Changing Globalisation Pattern
  • The era of rapid globalisation is weakening due to trade wars, technology restrictions, strategic tariffs, and US-China rivalry, forcing countries to focus on economic security and industrial self-reliance.
• Weak Manufacturing Capacity
  • Manufacturing contributes only around 15–17% of India’s GDP, much lower than East Asian economies.
  • India’s trade deficit with China crossed $100 billion in 2025, with imports of nearly $114 billion, mainly in manufactured goods and high-tech equipment.
  • This creates dependence in critical sectors such as electronics, semiconductors, renewable energy equipment, and defence.
• Slow Growth in Income and Employment
  • Despite strong GDP growth, income growth has remained limited. Since 1991, China’s per capita income increased nearly 38 times, while India’s increased around 8 times.
• Limited Technological Capability
  • India spends only about 65% of GDP on Research & Development (R&D), limiting innovation, technological independence, and high-value manufacturing.
• Weak Domestic Demand
  • Limited purchasing power among farmers, workers, and small entrepreneurs reduces consumption, affects private investment, and increases inequality.

Government Initiatives Supporting New Growth Strategy

• Production Linked Incentive (PLI) Scheme
  • PLI promotes domestic manufacturing in electronics, pharmaceuticals, telecom equipment, automobiles, and solar modules while integrating India with global production chains.
• Atmanirbhar Bharat Abhiyan
  • It promotes self-reliance in strategic sectors by strengthening domestic manufacturing while maintaining global economic linkages.
• National Semiconductor Mission
  • It supports semiconductor fabrication, chip design, and packaging facilities to reduce dependence on imported chips.
• Startup India and Deep-Tech Ecosystem
  • These initiatives promote innovation in AI, biotechnology, space technology, and advanced manufacturing.
• PM Gati Shakti and National Logistics Policy
  • They aim to improve infrastructure connectivity, reduce logistics costs, and enhance industrial competitiveness.
• Digital Public Infrastructure (DPI)
  • Platforms such as UPI, Aadhaar, DigiLocker, and ONDC promote innovation, financial inclusion, and productivity growth.

Way Forward: Building India’s New Growth Model

• Strengthen Domestic Manufacturing
  • India should move beyond basic assembly and develop complete industrial ecosystems in electronics, semiconductors, defence production, green technologies, and advanced machinery.
• Increase R&D Investment
  • India should increase R&D expenditure towards 2% of GDP through industry-academia collaboration, tax incentives, deep-tech funding, and innovation financing.
• Expand Domestic Demand
  • Economic growth should be supported by higher rural incomes, improved agricultural productivity, stronger MSMEs, skill development, and better wages.
• Promote Planned Urbanisation
  • Development of new cities and industrial centres can generate employment, reduce pressure on metros, and improve productivity through better infrastructure.
• Invest in Human Capital
  • Quality education, technical training, apprenticeships, and industry-linked skills are necessary to convert India’s demographic dividend into economic strength.
• Improve Governance and Institutions
  • Transparent regulations, contract enforcement, ease of doing business, and stable policies are essential for attracting investment and encouraging innovation.

Conclusion

The 1991 reforms successfully opened India’s economy and accelerated growth, but the changing global environment requires a new development strategy.

India’s future growth model must focus on manufacturing strength, technological self-reliance, innovation, skilled workforce, and inclusive income growth to achieve its goal of becoming a developed economy.

GOVERNANCE

2. Inclusive Transformation of Vulnerable Sections in India

Context: India has witnessed significant progress in inclusive development through expansion of welfare schemes, social protection measures, financial inclusion, and targeted support for vulnerable communities.

What is Inclusive Transformation?

• Inclusive Transformation refers to a development approach where the benefits of economic growth, social development, and government policies reach all sections of society, especially poor, marginalised, and vulnerable groups.
• It focuses on improving income, access to basic services, equal opportunities, and human capabilities to reduce socio-economic inequalities.

Initiatives for Inclusive Transformation

• Poverty Alleviation and Social Protection
• Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)
• Provides free food grains to more than 81 crore beneficiaries, ensuring food security among vulnerable households.
• One Nation One Ration Card (ONORC)
• Ensures portability of ration benefits across India, especially supporting migrant workers.
• Direct Benefit Transfer (DBT)
• Improves transparency in welfare delivery by directly transferring benefits and reducing leakages.

Financial Inclusion

• Pradhan Mantri Jan Dhan Yojana (PMJDY)
• Expanded banking services to over 58 crore beneficiaries, promoting access to formal financial systems.
• PM Mudra Yojana
• Provides collateral-free loans to micro and small entrepreneurs, encouraging self-employment.
• Digital Payments
• Platforms such as UPI have improved financial inclusion and promoted digital transactions.

Healthcare and Nutrition

• Ayushman Bharat–PMJAY
• Provides health insurance coverage of ₹5 lakh per family to improve access to affordable healthcare.
• Ayushman Bharat Digital Mission
• Promotes digital health records and improves access to healthcare services.
• Mission Indradhanush
• Strengthens immunisation coverage and improves maternal and child healthcare outcomes.

Water, Sanitation and Housing

• Jal Jeevan Mission
• Provides functional household tap water connections to improve drinking water accessibility.
• Swachh Bharat Mission
• Expanded sanitation coverage and improved hygiene practices across India.
• Pradhan Mantri Awas Yojana (PMAY)
• Supports affordable housing for rural and urban poor.

Women Empowerment

• PM Ujjwala Yojana
  • Provides clean cooking fuel connections to women from poor households, reducing health risks.
• Beti Bachao Beti Padhao
  • Promotes protection, education, and empowerment of the girl child.
• Women Entrepreneurship Initiatives
  • DAY-NRLM, Lakhpati Didi, and Drone Didi initiatives promote women-led enterprises and economic participation.

Livelihood and Employment Generation

• Employment Support
  • MGNREGA and livelihood missions promote wage employment, rural asset creation, and income security.
• PM SVANidhi
  • Provides collateral-free loans to street vendors for strengthening small businesses.
• PM Vishwakarma
  • Supports traditional artisans and craftsmen through skill development and financial assistance.

Tribal Development

• Dharti Aaba Janjatiya Gram Utkarsh Abhiyan
  • Focuses on holistic development of tribal communities through improved access to basic facilities.
• Eklavya Model Residential Schools (EMRS)
  • Improve educational opportunities and quality learning access in tribal areas.

Progress Achieved in Inclusive Transformation

• Poverty Reduction
  • Multidimensional poverty declined from 17% in 2013-14 to 11.28% in 2022-23, lifting nearly 25 crore people out of poverty.
• Improved Water and Sanitation Access
  • Rural tap water connections increased from 23 crore households in 2019 to 15.84 crore by May 2026, covering around 81.87% rural households.
  • Sanitation coverage increased from 39% in 2014 to 100% in 2019.
• Better Health Outcomes
  • Maternal Mortality Ratio (MMR) reduced from 130 (2014-16) to 88 (2021-23) per 1 lakh live births, reflecting improved healthcare access.
• Clean Energy and Electricity Access
  • Under PM Ujjwala Yojana, 57 crore LPG connections were provided, while rural electricity supply improved from 12.5 hours/day in 2014 to 22.6 hours/day in 2025.
• Women-Led Development
  • Women associated with Self-Help Groups increased from 37 crore to nearly 10 crore, with SHGs reaching around 91.75 lakh under DAY-NRLM.

Challenges in Inclusive Development

• Regional Inequality
  • Development outcomes remain uneven across states, districts, rural areas, and tribal regions.
• Quality of Public Services
  • Access to basic services has improved, but quality of healthcare, education, and sanitation remains uneven.
• Employment Vulnerability
  • Large informal employment, limited quality jobs, and income insecurity continue to affect vulnerable sections.
• Nutritional Challenges
  • Child malnutrition, anaemia, and stunting remain major concerns despite welfare measures.
• Digital Divide
  • Gaps in internet access and digital literacy continue in remote, rural, and tribal regions.
• Social Exclusion
  • Migrants, elderly citizens, persons with disabilities, and urban homeless populations still face difficulties in accessing welfare benefits.
• Fiscal Challenges
  • Increasing welfare commitments require sustainable financing and better targeting of beneficiaries.

Way Forward

• Improve Last-Mile Delivery
  • Beneficiary identification, service delivery mechanisms, and grievance redressal systems should be strengthened.
• Focus on Quality Outcomes
  • India should move from infrastructure creation towards improving service quality and outcome-based monitoring.
• Promote Digital Inclusion
  • Broadband connectivity, digital literacy, and access to digital services should be expanded in underserved regions.
• Strengthen Human Capital
  • Greater investment in education, healthcare, nutrition, and skills is required for long-term inclusive growth.
• Enhance Cooperative Federalism
  • Better coordination between the Centre, States, and local governments is essential for effective implementation of welfare programmes.

Conclusion

India’s inclusive transformation reflects a shift from welfare delivery to empowerment-based development through financial inclusion, social security, infrastructure, and digital governance.

Sustained focus on quality services, human capital, technology, and last-mile delivery will ensure that development reaches every section of society and supports the goal of Viksit Bharat 2047.

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