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Indian Economy Since Independence

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Home/Post-independence India/Indian Economy Since Independence

Mains Answer Writing Latest Questions

Vinay Sabharwal
  • 1
Vinay SabharwalLearner
Asked: August 6, 2024In:
  • 1

Examine how the public sector has changed and how India’s industrial policy has changed since independence.

upsc: indian economy since independence
  1. Shekhar jaat
    Shekhar jaat Begginer

    Public Sector's Role in Industrial Development The public sector played a crucial role in India's industrial development in the post-independence era. The government recognized the importance of a strong public sector to accelerate economic growth and reduce regional disparities. Public Sector UnderRead more

    Public Sector’s Role in Industrial Development

    The public sector played a crucial role in India’s industrial development in the post-independence era. The government recognized the importance of a strong public sector to accelerate economic growth and reduce regional disparities.

    Public Sector Undertakings (PSUs) were established to provide essential services, promote national interest, and ensure socio-economic development.

    Evolution of Industrial Policy

    India’s industrial policy has undergone significant changes since independence. From a mixed economy to a liberalized economy, the government’s role has evolved from regulation to facilitation.

    Early Years (1947-1960s)

    The early years of independent India saw the establishment of PSUs in strategic sectors like steel, power, and heavy industries. The government aimed to promote self-reliance and reduce dependence on foreign imports. The Industrial Policy Resolution (1948) and the Public Sector Undertakings (PSUs) Act (1973) laid the foundation for the growth of the public sector.

    Liberalization and Privatization (1990s-2000s)

    In the 1990s, India embarked on a path of economic liberalization. The government privatized several PSUs, introduced new policies, and removed regulatory barriers to encourage private investment and competition. This period saw significant growth in the IT sector, pharmaceuticals, and automotive industries.

    Recent Developments (2010s-present)

    In recent years, the Indian government has focused on promoting ‘Make in India’, ‘Start-up India’, and ‘Digital India’ initiatives. These initiatives aim to attract foreign investment, promote entrepreneurship, and boost exports. The government has also implemented policies to promote domestic manufacturing, such as the ‘Production Linked Incentive (PLI) Scheme’ and the ‘National Infrastructure Pipeline’.

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Anonymous
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Anonymous
Asked: July 25, 2024In: ,
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How does income inequality impact the social fabric of Indian society? What measures can be taken to reduce the widening gap between the rich and poor in India?

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  1. Dilip Kumar
    Dilip Kumar Begginer
    This answer was edited.

    Income inequality significantly impacts the social fabric of Indian society in various ways:   1. Social Segregation: Widening income gaps lead to physical and social segregation, as the rich and poor live in separate worlds.   2. Limited Social Mobility: Income inequality restricts opportRead more

    Income inequality significantly impacts the social fabric of Indian society in various ways:

     

    1. Social Segregation: Widening income gaps lead to physical and social segregation, as the rich and poor live in separate worlds.

     

    2. Limited Social Mobility: Income inequality restricts opportunities for upward mobility, perpetuating cycles of poverty.

     

    3. Increased Crime and Violence: Economic disparities can fuel crime, violence, and social unrest.

     

    4. Health Disparities: The poor face inadequate access to healthcare, leading to poor health outcomes.

     

    5. Education Inequality: Limited access to quality education perpetuates income inequality.

     

    6. Social Unrest and Protests: Severe income inequality can lead to social movements and protests.

     

    Addressing income inequality is crucial to maintaining India’s social fabric and promoting a more equitable society.

     

     

    Measures to reduce the widening gap between rich and poor India.

     

    I.Foster Inclusive Framework:

    a) Enforce Constitutional Provision: Enforce constitutional guarantee of equality as enshrined in fundamental rights through policy measures. Government policies that are formulated to strengthen these rights need strict implementation.

    b)Progressive Taxation: Implementing progressive taxation in India can help reduce income inequality by ensuring that those who earn more contribute a higher proportion of their income to taxes. A 1% wealth tax on Indian billionaires is enough to fund the National Health Mission, India’s largest healthcare scheme. Taxing India’s billionaires at 2% would support the nutrition of India’s malnourished for three years.

    c)Inclusive Governance: Foster inclusive governance by encouraging citizen participation, promoting transparency, and reducing corruption. Empower local self-governments and involve marginalized communities in decision-making processes.

    d)Private Sector Engagement: Encourage corporate social responsibility (CSR) initiatives that focus on inclusive development. Encourage private companies to invest in social sectors and support community development projects.

     

    II. Increase the Reach of Basic Necessities:

    a) Universal Access to Public Services: By ensuring universal access to public funded high-quality services like public health and education, social security benefits, employment guarantee schemes, inequality can be reduced to a great extent.

    b) Employment Generation: The labor-intensive manufacturing sector of India has the potential to absorb millions of people who are leaving farming while the service sector tends to benefit the urban middle class.

    c) Women Empowerment: Promote gender equality in education, employment, and entrepreneurship to empower women economically and socially.

     

    III. Social and Financial Inclusion:

    a) Land Reforms: Implement land reforms to address issues of land ownership and tenancy. Ensure fair and equitable distribution of land resources.

    b) Promoting Civil Society: Provide a greater voice to traditionally oppressed and suppressed groups, including by enabling civil society groups like unions and associations within these groups.

    c) Technology and Innovation: Embrace technological advancements to create new opportunities for all. Ensure that the benefits of technological progress are shared across different sections of society.

     

    By embracing and implementing inclusive policies that tackle the underlying causes of inequality, India has the potential to transition towards a more equitable society.

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Ishani Mitra
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Ishani MitraBegginer
Asked: August 2, 2024In: , , , , ,
  • 0

Kuznet’s inverted U-hypothesis mainly talks about a statistical relationship between growing income inequality and economic growth. It describes a stage where after a certain level of economic growth, the technology advancements acts in narrowing of the diabolical disparity in GDP ...

question
  1. Anita Dhruw
    Anita Dhruw Legend

    Kuznet’s Inverted U Hypothesis Kuznet’s hypothesis in the effect of economy development, with initial prejudice income disparity rises. Reasons can be described in terms of: There is a clear positive relationship between industrialization and proportionate increase in wealth at initial stages whereRead more

    Kuznet’s Inverted U Hypothesis

    Kuznet’s hypothesis in the effect of economy development, with initial prejudice income disparity rises. Reasons can be described in terms of: There is a clear positive relationship between industrialization and proportionate increase in wealth at initial stages where most wealth is concentrated at the few; while the majority of population including workers largely in traditional sectors receive stagnant wages- incomes.

    -Technological Change: Technological advancement and development bring about the creation of new forms of wealth but who benefits most or first may be those with retirement financial muscle and skills.

    However, in the later stages of economic maturity and development, the economy:
    -Technological progress: Brings about greater efficiency, and hence improved wages for a higher percentage of citizens.
    -Social safety nets: The progressive taxation, social programs and welfare measures offered by the government eliminate inequalities.

    -Education and skill development: Investing in keeping education and skills enhances a better skilled human resource, and income equality is also promoted.

    India’s Economic Context

    -Post-Independence Growth: India has seen a very dynamic economic growth ever since getting its independence at the beginning of 1947.

    -Initial Inequality: In the early days of planned development there was slight increase in inequality as those who benefited from industrialization were specific sectors and regions.

    -Recent Trends: Top management pay has been ascending in India during the last several decades. This is mainly due to factors such the globalization, liberalization and advancement in technology which e has enhanced the growth of some sectors and geographical locations than others.

    Nature of economic activities on the Kuznet’s Curve

    Based on the available economic status of India, it is at the rising stage of the Kuznet’s curve.

    -Increasing Inequality: Growth has been sizeable but not necessarily inclusive. Income inequality has risen and the number of people falling into poverty and inequality is quite significant.

    Going to enter the decline: India would likely be among the first to enter the decline part of the curve. The policies of inclusive growth, social safety nets, and skill development will bring that about.

    In general:

    In its economic performance, India has truly shown quite outstanding growth but remains yet to be done as regards rising inequality. This calls for focus on policies which would bring forth equitable wealth distribution, enhance strength in the social safety net, and also the development of human capital that leads to going down the curve.

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Nishi Desai
  • 1
Nishi DesaiBegginer
Asked: August 6, 2024In:
  • 1

Evaluate the successes and limitations of India’s early industrialization plan based on import substitution.

upsc: indian economy since independence
  1. Kanhiya Lal
    Kanhiya Lal Begginer

    The import-substitution industrialization (ISI) strategy was a key component of India's economic policy in the early decades following independence. Here's an evaluation of the successes and limitations of the ISI strategy: Successes: Rapid Industrialization: The ISI strategy led to rapid industrialRead more

    The import-substitution industrialization (ISI) strategy was a key component of India’s economic policy in the early decades following independence. Here’s an evaluation of the successes and limitations of the ISI strategy:

    Successes:

    1. Rapid Industrialization: The ISI strategy led to rapid industrialization in India, with the country’s industrial output growing at an average rate of 8% per annum during the 1950s and 1960s.
    2. Self-Sufficiency: The strategy helped India achieve self-sufficiency in many industries, such as textiles, steel, and automobiles.
    3. Job Creation: The ISI strategy created a large number of jobs in the manufacturing sector, helping to reduce unemployment.
    4. Domestic Capital Formation: The strategy encouraged domestic capital formation, with the government investing heavily in infrastructure and public sector enterprises.

    Limitations:

    1. Over-Dependence on Public Sector: The ISI strategy over-emphasized the role of the public sector, leading to a lack of competition and inefficiencies in many industries.
    2. Lack of Competition: The protectionist policies implemented under the ISI strategy created a lack of competition, which hindered innovation and efficiency.
    3. Import Dependence: Despite the name “import-substitution”, India remained heavily dependent on imports, particularly in sectors like oil and machinery.
    4. Inefficient Allocation of Resources: The government’s direct control over resources led to inefficient allocation, with many resources being wasted on unviable projects.
    5. Inflation: The ISI strategy led to high inflation rates, as the government’s expansionary policies fueled demand for goods and services.
    6. Limited Growth: The growth rate of the Indian economy was limited by the ISI strategy, which failed to create a sustainable and competitive economy.
    7. Trade Deficits: The strategy led to large trade deficits, as India imported more goods than it exported.
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Avni Pal
  • 0
Avni PalBegginer
Asked: July 14, 2024In: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
  • 0

In case of recession, why are most companies laying off many of their employees?

question
  1. Reshma Shaik
    Reshma Shaik Begginer

    During a recession, companies lay off employees primarily to manage costs and ensure survival. Revenue drops as consumer spending decreases, prompting businesses to reduce expenses, and labor is one of the largest costs. Layoffs help immediately cut payroll expenses and preserve cash flow, which isRead more

    During a recession, companies lay off employees primarily to manage costs and ensure survival. Revenue drops as consumer spending decreases, prompting businesses to reduce expenses, and labor is one of the largest costs. Layoffs help immediately cut payroll expenses and preserve cash flow, which is crucial during economic uncertainty.

    With lower demand for products and services, companies need fewer employees. Aligning the workforce with reduced demand helps maintain operational efficiency. Additionally, recessions often trigger restructuring efforts to streamline operations and eliminate redundancies, further driving layoffs.

    Publicly traded companies face investor pressure to maintain profitability and protect stock prices. Layoffs signal decisive cost management, reassuring investors about the company’s financial health. For some businesses, layoffs are essential to avoid bankruptcy, ensuring they can continue operations during the downturn.

    While layoffs are common, they can harm employee morale, company reputation, and long-term performance. Some companies explore alternatives like reducing executive salaries, cutting non-essential expenses, or implementing temporary furloughs to mitigate these impacts. Ultimately, layoffs are a strategic move to balance immediate cost reduction with the goal of emerging stronger post-recession.

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Swapna Sundari
  • 0
Swapna SundariLearner
Asked: January 27, 2025In:
  • 0

Roadmap for Answer Writing 1. Introduction Purpose: Briefly introduce the context of India’s economic liberalization in 1991. Explain the reason behind the reforms and the need for a shift from earlier policies. Key Focus: Mention the main objectives of the 1991 reforms, including ...

upsc: indian economy since independence
  1. Team
    Best Answer
    Team Supreme

    Model Answer Introduction India's economic liberalization of 1991 marked a major shift in the country’s economic landscape. In response to a severe fiscal crisis, the government introduced reforms that focused on liberalization, privatization, and globalization. These reforms drastically altered IndRead more

    Model Answer

    Introduction

    India’s economic liberalization of 1991 marked a major shift in the country’s economic landscape. In response to a severe fiscal crisis, the government introduced reforms that focused on liberalization, privatization, and globalization. These reforms drastically altered India’s economic policies compared to the previous state-controlled approach.

    Key Differences Between the Economic Policies of 1991 and Earlier Policies

    1. Market Orientation: Previously, India’s economy was dominated by state control and protectionism, with a focus on import substitution. In contrast, the 1991 reforms emphasized market-oriented policies, including deregulation and liberalization of trade and investment.
    2. Foreign Investment: Earlier, India followed inward-looking policies aimed at self-sufficiency, limiting foreign investment. The 1991 reforms reversed this by promoting an open economy and encouraging foreign capital inflows.
    3. Role of the Private Sector: Under past policies, state-owned enterprises controlled key sectors of the economy. The 1991 reforms significantly increased the role of the private sector, particularly in infrastructure and manufacturing.
    4. Subsidies: The pre-liberalization era relied heavily on subsidies for sectors like agriculture and energy. Post-reform, these subsidies were reduced to curb fiscal deficits.
    5. Technology and Modernization: While the earlier policies did not focus much on technology, the 1991 reforms stressed modernization, leading to an upsurge in the IT sector and R&D investments.

    Short-Term and Long-Term Impacts

    1. Short-Term Impacts

    • Job Losses: Privatization led to layoffs in state-owned companies, creating social unrest.
    • Inflation: Increased inflation due to deregulation, raising the prices of goods and services.
    • Foreign Investment: Influx of foreign capital stabilized the economy.
    • Currency Depreciation: The rupee depreciated, raising the cost of imports.
    • Service Sector Growth: IT and financial services saw significant growth, contributing to short-term revenue gains.

    2. Long-Term Impacts

    • Economic Growth: Sustained GDP growth averaging 6-7% annually, positioning India among the fastest-growing economies.
    • Poverty Reduction: The World Bank reports a sharp decline in poverty, from 60% in 1981 to around 20% in recent years.
    • Entrepreneurship and Modernization: The liberalization fostered entrepreneurship, especially in IT and finance.
    • Urbanization: Economic growth triggered urban migration, with urban population growth from 26% to 34%.
    • Global Integration: India’s economy became more integrated globally, boosting trade, investment, and cultural exchange.

    Conclusion

    The 1991 economic liberalization policies radically transformed India’s economy by shifting towards a market-driven model. While the short-term impact included job losses and inflation, the long-term effects have been overwhelmingly positive, with significant growth, poverty reduction, and global integration.

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Vinay Sabharwal
  • 0
Vinay SabharwalLearner
Asked: August 6, 2024In:
  • 0

Talk about the causes of the 1990s economic liberalization policies and how they affected India’s growth trajectory.

upsc: indian economy since independence
  1. Hareem Khan
    Hareem Khan Begginer

    The economic liberalization reforms of the 1990s in India were a series of significant policy changes that aimed to transform the country's economy from a highly regulated and state-controlled system to a more open and market-oriented economy. The key factors that led to these reforms were: EconomicRead more

    The economic liberalization reforms of the 1990s in India were a series of significant policy changes that aimed to transform the country’s economy from a highly regulated and state-controlled system to a more open and market-oriented economy. The key factors that led to these reforms were:

    1. Economic crisis: India faced a severe economic crisis in the early 1990s, characterized by high inflation, balance of payments problems, and a stagnant economy. This crisis created an urgent need for economic reforms.
    2. External pressures: The International Monetary Fund (IMF) and the World Bank, along with other international organizations, pushed India to adopt economic reforms as a condition for providing financial assistance.
    3. Changing global economy: The fall of the Soviet Union and the rise of globalization created new economic opportunities for India, making it essential for the country to adapt to these changes.
    4. Domestic political factors: The Indian government, led by Prime Minister P.V. Narasimha Rao and Finance Minister Manmohan Singh, recognized the need for economic reforms and was willing to implement them.

    The key reforms introduced during this period included:

    1. Trade liberalization: India reduced tariffs and import restrictions to increase trade and attract foreign investment.
    2. Devaluation of the rupee: The Indian government devalued the rupee to make exports more competitive and reduce the trade deficit.
    3. Privatization: The government privatized several public sector enterprises, including banks, insurance companies, and other industries.
    4. Deregulation: The government removed many regulations and restrictions on business, allowing companies to operate more freely.
    5. Institutional reforms: The government established independent regulatory bodies, such as the Reserve Bank of India (RBI), to manage the economy and regulate financial institutions.

    The impact of these reforms on India’s growth trajectory was significant:

    1. Economic growth: India’s GDP growth rate accelerated from an average of around 3% per year during the 1980s to over 6% per year during the 1990s and beyond.
    2. Foreign investment: The liberalization of foreign investment policies led to a significant increase in foreign direct investment (FDI) in India.
    3. Inflation control: The government’s inflation targeting framework, introduced in the late 1990s, helped to control inflation, which remained relatively low throughout the decade.
    4. Increased trade: India’s trade volumes increased significantly, with exports growing at an average annual rate of over 10% during the 1990s.
    5. Poverty reduction: The economic reforms contributed to a decline in poverty rates, with the proportion of people living below the poverty line decreasing from around 35% in 1991 to around 20% in 2005.

    However, the reforms also had some negative consequences, such as:

    1. Unemployment: The liberalization of industries led to job losses in some sectors, particularly among unskilled laborers.
    2. Income inequality: The reforms contributed to increased income inequality, with the richest 10% of households capturing a larger share of national income.
    3. Environmental concerns: The rapid growth driven by the reforms led to concerns about environmental degradation, pollution, and climate change.
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Sharqa Tabrez
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Sharqa TabrezBegginer
Asked: July 11, 2024In: , , , ,
  • 0

How have evolving economic dynamics impacted fiscal relations between the Union and the States in India? Answer in 250 words.

evolution of indian economypolityquestion
  1. Shivani
    Shivani Begginer
Rajeshwari Meena
  • 0
Rajeshwari MeenaBegginer
Asked: July 2, 2024In:
  • 0

Despite being implemented with great optimism, India’s post-independence land reform initiatives were largely ineffective. Provide a critical analysis. (150 words)

upsc: indian economy since independence
  1. Saba Rehan
    Saba Rehan Begginer

    Land reforms in India, launched post-independence, aimed to dismantle feudal landholding systems and ensure equitable land distribution. Despite these goals, their impact was limited. Economic Aspects Goal: Increase agricultural productivity and reduce poverty. Data: By 2000, only about 2% of agricuRead more

    Land reforms in India, launched post-independence, aimed to dismantle feudal landholding systems and ensure equitable land distribution. Despite these goals, their impact was limited.

    Economic Aspects

    • Goal: Increase agricultural productivity and reduce poverty.
    • Data: By 2000, only about 2% of agricultural land had been redistributed.
    • Result: While Punjab saw productivity gains, Bihar continued to struggle with fragmented landholdings.

    Social Aspects

    • Goal: Reduce inequality and provide land to the landless.
    • Data: Approximately 7.5 million acres of surplus land were redistributed out of 30 million identified.
    • Result: States like Kerala and West Bengal saw reduced landlessness, but social inequality persisted in many areas.

    Historical Context

    • Challenge: The entrenched zamindari system.
    • Data: Many landlords used illegal transfers and fragmentation to evade land ceiling laws.
    • Result: In states like Uttar Pradesh and Bihar, landlords retained control over large tracts of land.

    Political Factors

    • Obstacle: Resistance from influential landowners.
    • Data: Tenancy reforms, meant to protect tenants, were weakly enforced.
    • Result: Corruption and inefficiency slowed reform progress, particularly in states like Tamil Nadu.

    Conclusion

    While land reforms had noble aims, their success was uneven due to historical entrenchment, regional disparities, and political resistance. These factors collectively hindered the transformative potential of the reforms, resulting in limited and varied outcomes across India.

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Maryam bhat
  • 0
Maryam bhatBegginer
Asked: July 23, 2024In: , , , , ,
  • 0

Why is there still such a huge unemployment rate in India even after being a labour intensive country , why are there still not many opportunities for our youth.why are we still behind the other big countries in terms of ...

questionyouth
  1. Pawni
    Pawni

    The high unemployment rate in India, despite being a labor-intensive country, is due to a complex interplay of factors. Here are some key reasons: 1. **Population Growth:** - India has a large and rapidly growing population, resulting in a significant number of new job seekers entering the labor marRead more

    The high unemployment rate in India, despite being a labor-intensive country, is due to a complex interplay of factors. Here are some key reasons:

    1. **Population Growth:**
    – India has a large and rapidly growing population, resulting in a significant number of new job seekers entering the labor market each year. The job creation rate is not keeping pace with this influx.

    2. **Education and Skill Gap:**
    – There is a mismatch between the education system and the needs of the labor market. Many graduates lack the practical skills and vocational training required by employers. The quality of education varies significantly, leading to a workforce that is not uniformly skilled.

    3. **Informal Sector Dominance:**
    – A large part of India’s workforce is employed in the informal sector, which includes jobs that are often low-paying, insecure, and lacking in benefits. These jobs do not provide the stability and growth opportunities that are needed to reduce unemployment effectively.

    4. **Slow Industrial Growth:**
    – The growth of industries that have the potential to create large-scale employment, such as manufacturing and construction, has been slower than expected. This is partly due to regulatory hurdles, infrastructure deficiencies, and other economic challenges.

    5. **Agricultural Dependence:**
    – A significant portion of the Indian population is still dependent on agriculture, which is often seasonal and subject to uncertainties such as monsoons and market fluctuations. This sector does not generate sufficient year-round employment.

    6. **Economic Reforms and Structural Issues:**
    – Economic reforms have sometimes led to jobless growth, where the economy grows but does not create a proportional number of jobs. Additionally, structural issues like land acquisition problems, bureaucratic red tape, and inconsistent policy implementation hinder industrial expansion and job creation.

    7. **Lack of Entrepreneurship and SME Growth:**
    – Small and medium enterprises (SMEs) are crucial for job creation but face challenges such as lack of access to finance, complex regulatory environments, and competition from larger firms. Encouraging entrepreneurship and supporting SMEs can help in generating more employment opportunities.

    8. **Technological Advancements:**
    – Automation and digitalization are transforming industries, leading to a demand for new skills while reducing the need for certain types of labor-intensive jobs. This shift requires workers to constantly upgrade their skills, which is challenging in the absence of robust skill development programs.

    To address these issues, India needs a multi-faceted approach that includes:

    – **Educational Reforms:** Aligning education with market needs and improving the quality of vocational and technical training.
    – **Skill Development Programs:** Enhancing skill development initiatives to equip the youth with industry-relevant skills.
    – **Industrial and Economic Policies:** Encouraging industrial growth, particularly in labor-intensive sectors, and reducing bureaucratic obstacles.
    – **Support for SMEs:** Providing better access to finance, simplifying regulatory processes, and fostering a conducive environment for small businesses.
    – **Agricultural Modernization:** Improving agricultural practices and providing alternative employment opportunities for those dependent on agriculture.
    – **Promotion of Entrepreneurship:** Encouraging innovation and entrepreneurship through supportive policies and incentives.

    These steps can help create more employment opportunities and bridge the skill gap, positioning India to better compete with other major economies.

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