Transformation of The Indian Economy

The Corona-virus pandemic has unsheltered the overdependence of various countries on China. The ongoing crisis had brought everything to a halt in China, which sundered the subsisting “supply chains.” Various countries all over the world have paid heed to this gremlin and are now looking to branch out their “supply chains.” They are looking for other apposite alternatives that can appropriately cater to their needs. These turns of events bestow India with a golden opportunity to establish itself as a “global manufacturing giant.” India can make hay while the sun shines by cashing in on the retreat happening in China.[1]

However, there are a lot of Gordian knots which are acting as a spoilsport in the economic transformation of India. These predicaments have been successful in disincentivizing companies from investing their capital in the Indian market.[2] The industrial giants are regarding other countries such as Vietnam and Taiwan as better options than India. Hence, the Indian government has to take some efficacious exertions before it is too late.[3]

One of the biggest quandaries in establishing a business in India is its exacting “land and labour” precepts. The land requisition process in India is unwieldy. The investors have to ‘keep their nose to the grindstone’ to requisite suitable land for themselves. This process eats up a lot of their time and resources, which hampers the ease of doing business in India. Another similar issue is of the antediluvian labour laws that have been subsisting for ages. It is nearly obsolete and deflates “large scale manufacturing,” which gives the beans to one country’s economy.[4]

Hence, there is an urgent need to address these issues. Flexible land and labour laws are the need of the hour.[5] The government has been contemplating bringing in a four code system that will incorporate all the labour codes, which will be helpful.[6] It also has created a pool of over 450,000 hectares of land for the companies that will displace from China. But, it needs to put in a lot more effort into the policy formulation process and make the process a bit more swift and pragmatic through bringing in suitable legislations.[7] Recently, the government of India has declared the agricultural reforms, which will decrease the labour participation in agricultural activities and will increase the same in manufacturing industries. Hence, these reforms are really necessary to exert a proper transition.[8]

Another facet of India’s economy, which is in shambles, is the “Power sector.” Though it churns out enough power to cater to all the requirements, villainous forces like “corruption, power theft, bad infrastructure, et al.” ensure that the power sector is a dog’s dinner in India. The inefficiency of the “distribution companies” also adds to the problems.[9]  One effective way to deal with the aforestated issues is that the “electricity distribution” process must be privatized in India. It will not only beef up the efficiency quotient of our power sector but will also help the government in focusing more on the infrastructure part, rather than bailing out the lousy “distribution companies[10]

There is no doubt in the fact that the education sector is the nitty-gritty of economic empowerment in this technology-oriented era. The education sector in India harnesses a lot of predicaments and needs a systematic overhaul. It needs to be modified to become more research-oriented. The education sector must be equipped to generate a scientific temper in the Indian populace and beef up their productivity and creativity.[11] India substantially lacks in the arena of “skill development,” which can only be cured by an efficacious education system.[12] Hence, relevant propositions, like the ones incorporated in the abovementioned “labour codes”[13], are needed to be introduced in our education system, which will undoubtedly help in the economic emancipation of India. [14]

Another factor that is a massive ‘causative factor’ behind economic growth is “healthcare.” India has not had a good history when it comes to healthcare. Substandard facilities, over the years, have hampered the productivity of the human capital.[15] They have also created a gashed perception about India and its ability to handle dire straits, as far as health care is concerned. Hence, the Indian government needs to act in order to change the status quo swiftly. It needs to create an atmosphere where the citizens become more apprised about their health. It needs to figure out the modalities through which they can provide scrupulous access to “affordable health care.” A ballooning and sustainable environment should be prepared where both the public as well as private enterprises, can concertedly operate for the betterment of the current scenario.[16]

India also needs to reduce its imports significantly. It has to dispense feasible resorts so that the dependency on other countries is cut down. Various effective steps like “liberalization of coal mining” will help in rectifying our “trade deficits[17]  Apart from that, India also needs to work on its “commercial contract enforceability.” It is one of the factors which haunt the country, especially when it comes to ease of doing business. The contracts exerted between the government and manufacturing companies are not adequately enforced. In case of any legal disputes, the inability of Indian courts to resolve them in a reasonable timeframe means that they stretch for a deplorable period.

All these factors cajole the investors to refrain from investing in India.[18] Hence, the government should look into this issue as soon as possible and bring in policy measures, which will help in amelioration of the current scenario. First of all, they should opt for arbitration for the timely disposal of the disputes. They also need to bring in some legislation that will preclude the cancellations of contracts after the transactions reach a particular stage. These measures will entice and allure more investments from manufacturing giants shortly.[19]

The Indian economy has an abundance of potentiality. It has the capacity to establish its pre-eminence in the world economy. But it is abstained by a lot of gremlins that play the role of a wet blanket. However, it can deftly vanquish them if it implements apposite exertions.[20] Some of the aforementioned suggestions can help the cause of the Indian economy and can go a long way in making it the superpower that it intends to be.


[1] Vinod Kumar, Post COVID 19 economy: A great opportunity to do it right, May 23, 2020, available at https://www.newindianexpress.com/opinions/2020/may/23/post-COVID-19-economy-a-great-opportunity-to-do-it-right-2146889.html  (Last accessed on June 26, 2020)

[2] Raghuram Rajan, Raghuram Rajan explains how to fix the economy, December 6, 2019, available at https://www.indiatoday.in/magazine/cover-story/story/20191216-how-to-fix-the-economy-1625364-2019-12-06 (Last accessed on June 26, 2020)

[3] Mridusmita, Companies to move manufacturing out of China-will India benefit?, May 20, 2020, available at http://economyria.com/companies-to-move-manufacturing-out-of-china-will-india-benefit (Last accessed on June 26, 2020)

[4] Devashish Mitra, How labour regulations affect manufacturing in India, March 13, 2018, available at https://www.livemint.com/Opinion/53blF1v8tQKSap0crJ9YxL/How-labour-regulations-affect-manufacturing-in-India.html (Last accessed on June 26, 2020)

[5] Id

[6] Yogima Seth Sharma, Govt. introduces Labour Code on Industrial Relations Bill in Lok Sabha, November 28, 2019, available at https://economictimes.indiatimes.com/news/economy/policy/govt-introduces-labour-code-on-industrial-relations-bill-in-lok-sabha/articleshow/72273873.cms?from=mdr (Last accessed on June 26, 2020)

[7] Mridusmita, Companies to move manufacturing out of China-will India benefit? May 20, 2020, available at http://economyria.com/companies-to-move-manufacturing-out-of-china-will-india-benefit/ (Last accessed on June 26, 2020)

[8] Samyak Pandey, Govt. approves big agricultural reforms that’ll help farmers trade freely, get a better price, June 3, 2020, available at https://theprint.in/india/govt-approves-big-agricultural-reforms-thatll-help-farmers-trade-freely-get-better-price/435097/ (Last accessed on June 26, 2020)

[9] M Choudhury, Why India’s power distribution sector needs reform, May 27, 2020, available at http://economyria.com/why-indias-power-distribution-sector-needs-reform/ (Last accessed on June 26, 2020)

[10]Id

[11] Abhinav Prakash Singh and Aasheerwad Dwivedi, India’s local economies lie outside innovation zone. Can’t chase Modi’s Atmanirbhar dream, May 28, 2020, available  at https://theprint.in/opinion/indias-local-economies-lie-outside-innovation-zone-cant-chase-modis-atmanirbhar-dream/430727/ (Last accessed on June 26, 2020)

[12]Ilhan Ozturk, The role of education in economic development: A theoretical perspective, February 10, 2001, availableathttps://www.researchgate.net/publication/24116294_The_Role_of_Education_in_Economic_Development_A_Theoretical_Perspective (Last accessed on June 26, 2020)

[13] Yogima Seth Sharma, Govt. introduces Labour Code on Industrial Relations Bill in Lok Sabha, November 28, 2019, available at https://economictimes.indiatimes.com/news/economy/policy/govt-introduces-labour-code-on-industrial-relations-bill-in-lok-sabha/articleshow/72273873.cms?from=mdr (Last accessed on June 26, 2020)

[14] Ilhan Ozturk, The role of education in economic development: A theoretical perspective, February 10, 2001, availableathttps://www.researchgate.net/publication/24116294_The_Role_of_Education_in_Economic_Development_A_Theoretical_Perspectiv (Last accessed on June 26, 2020)

[15] Julio Frenk, Health and the economy: A vital relationship, May 2004, available at https://oecdobserver.org/news/archivestory.php/aid/1241/Health_and_the_economy:_A_vital_relationship_.html (Last accessed on June 26, 2020)

[16]  Karan Singh and Parijat Ghosh, Healthcare and economic growth, April 18, 2016, available at https://www.livemint.com/Politics/PuYLifV8TNzD13GqiK3JmN/Healthcare-and-economic-growth.html (Last accessed on June 26, 2020)

[17]RC Acharya, Reducing the trade deficit with China, August 02, 2019, available at https://www.financialexpress.com/opinion/reducing-the-trade-deficit-with-china/1663509/ (Last accessed on June 26, 2020)

[18] Mridusmita, Companies to move manufacturing out of China-will India benefit?, May 20, 2020, available at http://economyria.com/companies-to-move-manufacturing-out-of-china-will-india-benefit/ (Last accessed on June 26, 2020)

[19] Id

[20] Raghuram Rajan, Raghuram Rajan explains how to fix the economy, December 6, 2019, available at https://www.indiatoday.in/magazine/cover-story/story/20191216-how-to-fix-the-economy-1625364-2019-12-06 (Last accessed on June 26, 2020)

Pratyush Kumar Jena

Pratysuh is from Bhubaneswar, India. He is currently a first year student of B.A.LLB. at West Bengal National University of Juridical Sciences

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