India stands at a critical economic juncture. Since 1990, government expenditure has increased more than 100-fold to 107 crore, while per capita GDP has risen only seven times, hovering around $2,700. These numbers speak volumes—and not in a flattering way. Meanwhile, China has seen a 42-fold jump in its per capita GDP, underscoring that it’s not just about how much you spend, but how wisely you govern and where you place your bets.
The gap between public spending and economic outcomes in India reveals a strategic mismatch. While we have no desire to live in China, one can’t help but admire how their economic playbook has translated ambition into tangible results—like manufacturing 3.1 crore cars in a year compared to India’s modest 50 lakh. It’s clear that China embraced industrialisation and private enterprise with far more enthusiasm and alignment than we have. Now, as we face global shifts—like the disruption of manufacturing chains sparked by U.S. protectionism—it is high time India rewrites its economic strategy. The path forward demands that we start trusting entrepreneurs, incentivising job creators, and celebrating innovation—not regulating it into oblivion.
A System Designed for Control, Not Creation
India’s regulatory environment continues to reflect a deeply entrenched bureaucratic mindset focused on control rather than facilitation. A common and telling question posed by regulators—“Who allowed you to do this?”—reveals a system governed by a “prohibited until permitted” philosophy. This approach fosters what is often described as regulatory cholesterol: an accumulation of outdated rules and excessive restrictions that obstruct economic dynamism.
The roots of this mindset can be traced back to the 1955 Avadi resolution, which positioned the government at the “commanding heights” of the economy. This legacy has distorted the allocation of capital and labour, leaving businesses constrained by rules that serve neither economic efficiency nor social progress. For India to realise the vision of a Viksit Bharat (Developed India) by 2047, a fundamental shift is required—one that adopts a governance philosophy of “permitted until thoughtfully prohibited,” trusting citizens and entrepreneurs by default.
The Hidden Cost of Excess Regulation
Current regulations actively discourage economic activity, especially in manufacturing. For instance, women are legally barred from over 200 processes in sectors like cashew processing and glass manufacturing. Hiring women for night shifts involves complying with 59 different conditions. These outdated rules not only shrink our labour pool but also reinforce gender inequality.
Factories, too, suffer. Half the land on industrial plots is wasted due to redundant standards, and regulations. For eg, road width alone prevents industrialisation in nearly 50% of rural India. In one case, building a single 300-worker factory is costlier than setting up two 150-worker units due to rigid zoning and space mandates. Even something as straightforward as hotel construction is skewed: a hotel in Singapore needs three floors for a given room count, while one in Noida needs seven, thanks to illogical floor-area rules. These are not merely inconveniences—they are direct obstacles to growth, job creation, and inclusion.
Why We Must Rethink the Role of the State
As Friedrich Hayek pointed out in his Nobel address, the economy is not a machine to be fine-tuned from a central console. It’s a complex ecosystem shaped by millions of individual decisions, each based on local knowledge that no bureaucrat can fully grasp. Over-regulation reflects a dangerous illusion: that planners know what’s best for everyone.
But make no mistake—this is not a call for no regulation or slashing government spending blindly. A modern welfare state must invest in infrastructure, education, healthcare, and defence. What we need is not less state, but a smarter one. Regulations must be fewer, clearer, and better enforced. The right dose makes the medicine; the wrong dose becomes poison. And just as important is where we place our human capital. Our best bureaucrats should be improving city governments, running schools, and fixing public hospitals—not drowning entrepreneurs in paperwork.
Decentralisation and Deregulation Go Hand in Hand
True reform means shifting power and resources from New Delhi to the states. Yes, many states today struggle with fiscal mismanagement, as pointed out by both NITI Aayog and NCAER. But the solution isn’t tighter control from the Centre—it’s building capacity at the local level. Governance must become more responsive, and that only happens closer to the ground.
Moreover, the real heavy lifting now lies in scrapping the thousands of outdated compliances and criminal provisions that make running a business in India more risky than rewarding. In fact, improving the ease of doing business is now synonymous with civil service reform.
Mass Prosperity Through Private Enterprise
Mass prosperity won’t come from more subsidies or schemes. It will come from creating millions of high-quality, formal, non-farm jobs—and that requires vibrant businesses operating in a low-friction, high-trust environment.
The Indian state often views successful entrepreneurs with suspicion rather than respect. But throwing wealth creators into the ocean—figuratively or otherwise—doesn’t lift up the poor. It only drags everyone down. Inequality isn’t solved by destroying wealth; it’s solved by expanding opportunity. The only prosperity program India can truly afford is one powered by private sector-led job creation, supported—not smothered—by the state.
A New Strategy for an Old Dream
The dream of a prosperous India is as old as our independence. But dreams must be matched with strategies. Kashmir’s poetry often says: Justuju (quest) must align with Arzoo (desire). If we desire a developed, equitable, and thriving India by 2047, our quest must shift. The path lies in deregulation, decentralisation, and designing government for empowerment—not control. It’s time we reimagine the state not as a gatekeeper, but as an enabler—and let India’s entrepreneurs do what they do best: build the future.
