India’s development strategy is undergoing a quiet but consequential shift—from rule-bound administration to entrepreneurial policy-making amid uncertainties.
The Economic Survey frames this transition as essential for navigating a world defined by geopolitical fragmentation, supply chain realignments, technological disruption, and recurring global shocks. At the centre of this shift lies a three-part architecture: stronger state capacity, an engaged society, and deep, sustained deregulation—together powering India’s journey toward Viksit Bharat and greater global influence, the finance ministry economists said.
Survey urges an entrepreneurial state
The Survey noted that today’s environment is volatile and contested. Rules are evolving, risks are compounding, and certainty is scarce. Under such conditions, the state must not merely regulate—it must anticipate, experiment, coordinate, and adapt. This is the essence of what Mariana Mazzucato calls the entrepreneurial state: not state capitalism, nor favouritism, but a government capable of acting before full certainty emerges, structuring risk rather than avoiding it, learning from failure, and correcting course without paralysis, the economists said.
India is already exhibiting early signs of this approach. Mission-mode initiatives in semiconductors and green hydrogen, innovation-oriented public procurement, and state-level reform compacts that replace inspection-heavy control with trust-based compliance reflect a movement from a compliance state to a capability state. The emphasis is shifting from policing activity to enabling productivity and problem-solving.
This transformation depends critically on system-level institutional capacity. State capacity is not a single reform or ministry; it is the composite outcome of how decisions are made, how risks are managed, how incentives shape behaviour, and how regulation functions in practice. Weakness in any one dimension can undermine progress elsewhere. That is why process reforms matter as much as policy reforms. Processes define everyday interaction between the government and the governed; they determine whether intent translates into outcomes.
Here, deregulation becomes a core instrument of capacity-building, not a retreat of the state. The Compliance Reduction and Deregulation Initiative illustrated this logic. By simplifying rules, eliminating redundancies, clarifying responsibilities, and digitising approvals through integrated single-window systems, administrative effort is redirected from low-value oversight to higher-value coordination and execution. Risk-based inspections, third-party certifications, and standardised reform templates across states increase predictability while preserving safeguards. The Task Force on Compliance Reduction and Deregulation, constituted in 2025, institutionalises this approach through cross-agency coordination and real-time learning—embedding reform into governance routines rather than treating it as a one-off drive.
State capacity needs firms, citizens onboard
Equally important is the role of society and the private sector. State capacity is co-created. When firms compete through productivity, technology, and scale instead of seeking protection or negotiated shelter, they shift the state’s role from discretion to competence. When citizens internalise compliance and care for shared systems—from public health to digital conduct—enforcement burdens fall, freeing administrative energy for delivery. The Survey therefore calls on large corporations to avoid protectionist habits, embrace import competition, and build external competitiveness, even as citizen responsibility is emphasised in tackling non-communicable diseases, obesity, and digital addiction.
This institutional strengthening underpins India’s strategic trajectory—from Swadeshi to strategic resilience, and ultimately to strategic indispensability. Indispensability goes further: building capabilities that others depend on, making India a source of stability in global systems, the Survey noted.