Discuss the new development strategy adopted in the Indian economy. (HPAS Mains Question Paper 2022 – GS 3, Q.26)
In 2020, the COVID-19 pandemic had a significant impact on the Indian economy, causing a sharp contraction in economic growth. In response to the crisis, the Indian government implemented a new development strategy to stimulate the economy and promote long-term growth.
Some of the critical elements of the New development strategy adopted in the Indian economy are:
Atmanirbhar Bharat Abhiyan (Indian Self-Sufficiency Campaign):
- The Atmanirbhar Bharat Abhiyan, also known as the Self-Reliant India Campaign, is a government of India economic stimulus package announced in May 2020. The package aims to boost domestic production while decreasing reliance on imports, making India more self-sufficient and less vulnerable to global economic shocks.
The Atmanirbhar Bharat Abhiyan has several primary goals:
- To promote domestic manufacturing and production in India across a wide range of industries, including electronics, pharmaceuticals, and textiles.
- To attract foreign investment into India and create employment opportunities for the Indian workforce.
- To provide financial assistance to small and medium-sized businesses affected by the COVID-19 pandemic.
- Investing in roads, highways, railways, and power generation to improve India’s infrastructure, particularly in rural areas.
- To promote digital transformation in India through initiatives such as Digital India and the National AI Mission.
Digital India:
The Government of India launched Digital India in July 2015 with the goal of transforming India into a digitally empowered society and knowledge economy. The programme aims to close the digital divide and bring the benefits of technology to all citizens, particularly those living in rural areas and those from low-income families.
The Digital India programme has three main goals:
- To build a nationwide digital infrastructure, including high-speed internet connectivity and broadband access.
- To provide all citizens with digital services such as e-governance, digital literacy, and digital payments.
- To promote digital inclusion and empowerment, particularly among women, youth, and marginalised communities.
The Digital India programme includes a number of initiatives and schemes, such as the following:
- Digital infrastructure: The programme aims to provide all citizens with high-speed internet connectivity and broadband access. It also encompasses the creation of digital highways, national knowledge networks, and data centres.
- Digital services: The programme aims to provide citizens with a variety of digital services, such as e-governance, digital literacy, and digital payments. This includes projects like the Digital Locker, e-Hospital, and the MyGov platform.
- Digital inclusion: The programme aims to promote digital inclusion and empowerment, particularly among women, youth, and marginalised communities. Initiatives such as the National Digital Literacy Mission, Common Service Centers, and the Pradhan Mantri Gramin Digital Saksharta Abhiyan are examples of this.
PLI (Production-Linked Incentive) Scheme:
- The Production Linked Incentive (PLI) scheme is a government initiative aimed at encouraging domestic manufacturing and increasing output in specific target industries. The scheme was announced by the Indian government in March 2020 and is part of the government’s self-reliance campaign, Atmanirbhar Bharat Abhiyan.
- Companies are offered financial incentives under the PLI scheme based on their incremental sales of goods manufactured in India. These incentives are available for five years and are intended to encourage companies to invest in domestic manufacturing and expand their production capacity. The PLI scheme is open to companies in a variety of industries, including electronics, pharmaceuticals, textiles, and automobiles.
- The PLI scheme aims to boost India’s manufacturing sector and make it more competitive in the global market. It is also expected to increase exports and create new jobs, reducing India’s trade deficit. The PLI scheme is expected to attract significant investments into India and aid in the development of the country’s robust manufacturing ecosystem.
- Companies from a variety of industries have reacted positively to the PLI scheme, with many announcing plans to invest in India and expand their manufacturing operations. The programme has also been expanded to include new industries such as food processing, white goods, and telecommunications equipment.
National Monetization Pipeline:
- The National Monetization Pipeline (NMP) is a plan devised by the Government of India to monetise its public assets, which include, among other things, roads, railways, airports, ports, power transmission lines, telecom towers, warehouses, and sports stadiums. The NMP’s goal is to unlock the value of public assets and generate revenue for the government, which can then be used to fund infrastructure development and social welfare programmes.
- Nirmala Sitharaman, Union Finance Minister, first announced the NMP in August 2021 as part of the government’s more considerable privatisation drive to increase private sector participation and investment in infrastructure development. The plan is aimed at monetising assets worth around Rs 6 lakh crore ($80 billion) over the next four years.
- Infrastructure, mining, real estate, and finance are the four sectors covered by the NMP. Assets such as national highways, airports, and ports will be monetised through leasing, concession agreements, and public-private partnerships in the infrastructure sector (PPPs). The mining sector includes assets such as coal mines, while the real estate sector includes assets such as government buildings and land parcels. Government-owned banks and insurance companies are examples of support in the finance sector.
- The NMP is expected to generate substantial revenue for the government, which will be used to fund new infrastructure projects and social welfare programmes. It is also likely to open up new investment opportunities for private sector players, which will aid in job creation and economic growth. However, some critics argue that the NMP will result in the loss of public assets and the creation of monopolies in specific sectors.
Dedicated Freight Corridor:
- A Dedicated Freight Corridor (DFC) is a specialised railway line dedicated to freight transportation, designed to be more efficient and cost-effective than traditional railway lines. DFCs are built to transport heavy freight trains with high axle loads and speeds, allowing goods to be moved quickly and reliably over long distances.
- The Indian government has begun work on two Dedicated Freight Corridors: the Eastern Dedicated Freight Corridor (EDFC) and the Western Dedicated Freight Corridor (WDFC) (WDFC). The EDFC runs for 1856 kilometres from Ludhiana in Punjab to Dankuni in West Bengal. The WDFC runs for 1504 kilometres from Dadri near Delhi to Jawaharlal Nehru Port near Mumbai. These corridors will be outfitted with cutting-edge signalling and communication systems, allowing for faster train speeds and more efficient operations.
Dedicated Freight Corridors have the following advantages:
- faster and more dependable goods transportation
- Reduced transit time and cost
- Increased capacity to accommodate more freight traffic
- increased safety and decreased congestion on existing rail networks
- Increased trade and commerce stimulate the economy and create new job opportunities.
Digital Payment Infrastructure: The Indian government has continued to encourage the use of digital payment infrastructure in order to improve access to financial services and promote financial inclusion. Several initiatives have been launched by the government, including the National Common Mobility Card and the Digital Payment Index.
Privatisation of Public Sector Enterprises: The Indian government has announced plans to privatise a number of public sector enterprises in order to improve efficiency and encourage competition. The government has identified several companies for privatisation, including Air India, Bharat Petroleum Corporation Limited (BPCL), and Shipping Corporation of India.
Reforms in the Indian Health Sector: The COVID-19 pandemic highlighted the need for reforms in the Indian health sector. To improve health infrastructure and promote access to healthcare services, the government has announced several initiatives, including the launch of the Ayushman Bharat Health Infrastructure Mission.
