Answer

Introduction

India’s aspiration of becoming a Viksit Bharat by 2047 requires not only high GDP growth but also strong productivity-led industrial expansion. A dynamic manufacturing sector is essential, yet zombie firms and stalled resource reallocation continue to weaken its potential.

Importance of Manufacturing Sector Reform for Achieving Viksit Bharat 2047

• Job Creation: Manufacturing generates large-scale employment, especially for semi-skilled youth shifting from agriculture.
  Eg: Labour-intensive sectors like textiles and electronics are central to Make in India and PLI schemes.
• Productivity Growth: Industrial expansion improves labour productivity compared to low-productivity agriculture and informal services as highlighted by the Economic Survey.
• Export Strength: A stronger manufacturing base improves export competitiveness and reduces trade imbalances.
• Supply Security: Domestic manufacturing reduces dependence on imports in critical sectors like semiconductors and defence.
  Eg: India Semiconductor Mission seeks strategic self-reliance in advanced manufacturing.
• Inclusive Growth: Manufacturing spreads development across regions through industrial clusters and MSME expansion.
  Eg: Industrial corridors like Delhi-Mumbai Industrial Corridor promote regional growth.

Impact of Zombie Firms and Stalled Reallocation of Resources

• Capital Lock-in: Zombie firms survive despite low productivity, trapping capital that could move to efficient enterprises.
• Credit Misallocation: Financial resources remain tied to unviable firms, reducing investment for innovative sectors.
  Eg: Twin Balance Sheet problem highlighted stressed corporate loans and weak bank lending cycles.
• Low Productivity: Unproductive firms reduce overall industrial efficiency and slow technological upgrading.
• Weak Competition: Zombie firms distort market competition by surviving on policy support rather than performance.
• Reform Delay: Slow insolvency resolution delays exit of failed firms and blocks resource reallocation.
  Eg: Delays under Insolvency and Bankruptcy Code (IBC), 2016 reduce the speed of productive asset redeployment.

Way Forward

• Faster Exit: Strengthen insolvency resolution to ensure quick closure or restructuring of unviable firms.
  Eg: Improving Insolvency and Bankruptcy Code timelines can accelerate asset recycling.
• Better Credit: Redirect institutional finance toward productive MSMEs, sunrise sectors, and innovation-driven industries.
  Eg: Priority support for electronics, EVs, and green manufacturing under industrial policy.
• Labour Reform: Flexible labour markets with worker protection can improve efficiency and industrial competitiveness.
  Eg: Labour Codes aim to simplify compliance while improving formal employment.
• Technology Push: Encourage automation, R&D, and industrial upgrading to raise competitiveness and productivity.
  Eg: National Manufacturing Policy supports innovation-led industrial expansion.
• Competitive Markets: Reduce protectionism and improve ease of doing business so efficient firms can grow faster.
  Eg: GST and logistics reforms improve market integration and industrial efficiency.

Conclusion

Aligned with SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation and Infrastructure), India’s path to Viksit Bharat 2047 requires a manufacturing sector that rewards efficiency, innovation, and competitiveness. Reviving industrial dynamism today will determine whether growth becomes truly transformative tomorrow.

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