The role of the State vis vis markets is an old and continuing debate. The nature, scale and extent is a matter of debate rather than the need of either.
This piece by Devesh Kapur and Arvind Subramanian offers a course to rebuild the Indian State:
"It is well worth remembering that the difference in the economic performance between China and India is not the extent to which each has turned to markets, because both have. Rather, the Chinese Communist Party-state, as an economic institution, is more responsive, more meritocratic, and more skilled in human capital than the Indian state. Rebuilding the Indian state on firmer foundations may well determine not just what future India will have, but whether it has a future."
The question is not whether we need the State or not, it is what kind of a State it should be.