Nachiket Mor, visiting Bodyis, Banyan Leadership Academy in Mental Health, Tamil Nadu and Sandhya Venkateswaran, senior colleagues at the Center for Social & Economic Progress

While the effects of the recent pandemic indeed set the Indian economy back several years, it is not clear if, before that, the development model we pursued (and seemed to be back, now that the worst pandemic seems to be behind us) is the most suitable to ensure that we are Realize our full potential as a country and as a person. Pre-Covid-19 estimates by the price of Waterhouse Cooper has suggested that, based on the current trend, even in 2050, India’s per capita income will only be in half the current level for developed countries.

The reform that began in the mid-1980s and was accelerated in the 1990s, partly because of the balance of payment of the crisis experienced by India in 1991, caused many changes, in particular, demolition of government iron grip, through central planning equipment, in the private sector. Spurt in the growth experienced by India following which suggested a strong causal relationship with this reform. However, while most of these changes were indeed welcomed, they represented more state withdrawals from roles (such as the licensing of private production capacity) that it was not suitable to play in the first place. It does not lead to fundamental or reenvisioning reimagination about how things will function and role.

Therefore, the question that must be considered is this: what forms the basis of withdrawal decisions for the country, in the role and fiscal commitment, cross-sector, and what should the role of the state, ideally? Whether it’s infrastructure, agriculture, financial services, telecommunications, or human development, each plays an important role in the development and growth of the country and can make a strong case for investment by the state. The choice where to remain and where to come out thus must have fewer relationships with relative sector contributions to growth and more with the nature of the sector and how the state needs to be involved with it to function optimally.

One possibility will identify sectors where the market functions properly and participants in this sector consider personal benefits to be high. In these sectors, the state recognizes that its aggressive involvement can be proven counter-productive and avoid efforts to intervene in tax investment actively or directly against them. However, it continues to play the role of active governance to ensure that the systemic crisis does not appear in these sectors, or distortion such as cartelization and anti-trust activities, which, among other things, can damage the level of innovation that occurs. In such sectors, the state also pays attention to the fact that the optimal functions of the market wherever they want to not want to produce population segments left behind because their current set of skills and work choices become less and less valuable, or they cannot participate as consumers in the market because Low income. Instead of distorting all markets through fiscal steps and policies in these sectors, a much more effective strategy for this country will directly offer protection or purchasing power to the population segment through a cash transfer scheme without conditions. Such an approach will relieve distress and accelerate the process of long-term adjustment to the area where the economy enjoys competitive advantage.