India must shift to entrepreneurial regime, rethink state capacity: Economic Survey

India needs to encourage risk-taking among bureaucrats, safeguarding them from "vexatious prosecution," the survey has argued. This is needed to ensure that decision makers innovate and take speedier calls, without fearing undue accusations of corruption-similar to East Asian economies that have developed robust manufacturing ecosystems.

According to the survey, India needs to "re-imaging state capacity in all its dimensions" and proactively shift to an "entrepreneurial" regime.

"Where a complex regulatory or economic decision is being alleged to be ill-motivated but without clear evidence of quid pro quo, the answer is difficult. The law will need to weigh this without making economic decision-making risk-averse," the survey said, calling for "a deeper shift towards entrepreneurial policymaking under uncertainty". India has already begun to see elements of this approach in practice with the creation of mission-mode platforms in semiconductors and green hydrogen, it said. Restructuring of public procurement to enable domestic innovation, and to state-level deregulation compacts that replace inspection-based control with trust-based compliance, are also mentioned among the implemented reforms.


"Ex ante clarity and ex post proportionality matter more than real-time scrutiny. This may require an explicit re-orientation of the approach of agencies like the Comptroller & Auditor General and of vigilance systems. It will also need an appropriate balance in laws relating to the prosecution of public servants," the survey suggested, noting that structural changes are needed to encourage required risk-taking in bureaucracy. According to the survey, the economies of Japan, South Korea, Taiwan, Singapore, China and Vietnam succeeded because their systems were designed to learn from mistakes and reallocate resources when bets failed. "This required a level of bureaucratic autonomy, political backing, and performance discipline that many countries found difficult to sustain," the survey said. Responding to a query on the survey recommendations, retired IAS officer Vijay Shankar Pandey said they are encouraging but noted: "Historically, the bureaucracy has been shielded from adverse action across regimes."