By Nageshwar Patnaik in Bhubaneswar, October 24, 2025: Self-reliance has become the buzzword these days with Prime Minister Narendra Modi repeatedly saying that every village, every district, and the country itself, needs to be self-reliant. However, the Modi government’s policy direction of ‘aatmanirbhar’ (self-reliance) has created doubts about its commitment to openness.

Mahatma Gandhi had defined self-reliance as ‘every village has to be self-sustained and capable of managing its affairs’. The father of the nation even had said that freedom from the British will not mean much without real Swaraj, with communities being able to govern themselves and meet their own needs.
After independence in 1947, there was some attempt at social control over the economy, and the 73rd and 74th Constitutional amendments to bring about some level of gram and nagar swaraj. However, after 1991 this was all forsaken.

Nevertheless, there were still some positive measures like the laws on the Right to Information, Rural Employment Guarantee, and Forest Rights in the early 2000s. Yet, after Modi headed the nation in 2014, the country has not seen anything that strengthens Swaraj.

The Modi government’s self-reliance policy appears to be aiming at increasing exports, including of manufacturing goods, as an intrinsic part of capacity building. With its technology-led outsourcing advantage, India has done well in services exports. But these alone cannot give India the technological depth necessary for it to achieve middle-income status.

In fact, Modi has been wooing industrial investments from foreign companies and governments. The PM has been trying to lure hundreds of foreign companies currently operating in China to come to invest in India in various sectors including textiles and food processing. This is a somewhat strange definition of ‘self-reliance’ as for Gandhi, Gram Swaraj was first and foremost about food and clothes being produced by communities.

The ruling BJP’s 2019 election manifesto only listed some charity items like piped drinking water, housing, and roads, under ‘Swaraj’. There was no mention of empowering villages to decide their own destiny.  Neither the Congress nor the BJP, nor any of the other parties in power in Delhi, have actually devolved such powers to panchayats and urban wards as per the 73rd and 74th Constitutional Amendments. Ironically, the Modi government has denied the panchayats and urban bodies financial and legal powers.

Once the LPG (liberalization, privatization and globalization) era was set in motion in 1991 in particular, all the governments have promoted high levels of consumerism in the name of growth, which is hardly compatible with the simplicity that self-reliance requires. Community Swaraj still remains a day-dream. Modern development meant a heavy focus on big industries and infrastructure, and the centralization of powers in Delhi, rather than a full decentralization of economic activity. Gandhi wrote in Young India: ‘Swaraj will come not by the acquisition of authority by a few, but by the acquisition of the capacity by all to resist authority when it is abused’.

Despite higher growth after liberalising reforms in the 1990s, the share of manufacturing in Gross Domestic Product (GDP) has remained around the mid-teens. In most other countries, it increased to about 30 per cent during similar growth transitions. Given India’s size and the varying skill-levels of its labour force, sustained growth will require suitable jobs.

In the post-independence import-substituting regime, Indian manufacturing settled into comfortable high-cost, low-quality outcomes in a protected market. The liberalisation of the 1990s brought about an ‘import competition’ regime, where manufacturing struggled because of its higher costs than subsidised Chinese exports.

The key difference is that, under this regime, manufacturing has to become efficient in order to compete internationally and gain export shares. The first task is to lower the cost of doing business. This could come in the form of regulatory and tax simplification, policy consistency, infrastructure development and lowering logistics and other costs.

In the financial sector, reforms have led to alternate funding sources becoming available and lower interest costs. Improvements in corporate governance and disclosure support have deepened corporate bond markets. Domestic market integration through the establishment of a GST and continuous improvement in infrastructure has lowered logistics costs.

Cross subsidisation — a major source of costs for industry — is being reformed to replace price-distorting subsidies with direct benefit transfers. In politically sensitive areas such as labour, the Modi government is seeking to simplify laws and encourage states to adopt them through the framework of competitive federalism.

Average import tariffs in India have fallen from above 100 per cent in the early 1990s to about 12 per cent in 2018. Since then, they have gone up to about 17 per cent, particularly in mobile phones and electronics. Similarly, foreign direct investment (FDI) has never exceeded two per cent of GDP in India, compared to domestic investment which exceeds 30 per cent. Rather than giving special favours to FDI, India will be better served by making business more accessible for all firms.

But this is hardly a reversal of liberalisation, especially given tariffs have come down again following dialogue with industry that protested higher input costs. More countries are adopting anti-dumping measures given intense competition from Chinese imports in both intermediate and final goods as Chinese excess capacity grows.

Developing skills and technological capabilities is also necessary to harness India’s demographic dividend. India has a large number of universities and institutions but the quality varies greatly. The New Education Policy, released in 2020, builds in more flexibility to ensure education can equip India’s young people with the skills they need.

Sustained future growth will require India to adopt strategic domestic reforms that can position it to make use of its natural advantages. Even as India seeks to strengthen its domestic capacity, the way to achieve to Swaraj is clearly missing.

On every Gandhi Jayanti, both the ruling and opposition party leaders vouchsafe to his ideals, he lived and died for. And yet for all these decades, no leader considered that self-reliant communities are at the base of these same ideals.

India started out with full political inclusion, having adopted democracy with universal suffrage, which should have led to inclusive economic policies. But a heterogeneous electorate allowed politicians to cultivate vote-banks and adopt populist schemes instead of delivering on governance and public services such as health, education and air quality. More decentralisation to states and local governments is required to deliver these services.