What India’s Economic Growth has Really Meant

The exponential growth of the Indian economy since the 1990s and its overtaking of the UK to become the fifth ranked global economy in 2025 has led many economists to celebrate this impressive rise to the top. Particularly, in respect to the rule and policies of Prime Minister Narendra Modi beginning in 2014, has seen a rise in real GDP every year excluding a Covid slump and has lead analysts at Morgan Stanley to predict India will become the world third largest economy in 2027 (Inamdar, 2024). Even with the implementation of US President Trump’s 50% tariffs since August last year the Indian economy has still seen growth higher than expected. For example, “India’s central bank last month revised the real GDP growth for fiscal 2026 to 7.3% from the earlier estimate of 6.8%” (Salve, 2026). Despite these very promising figures many Indias still live on the most basic sustenance, and this consistent growth has not seen much of a rise in living standards for much of Indias population. The story of India’s economy is one that indicates the flaws in traditional measures of economic growth while still emphasising their value for rising economies in the global south.

The huge economic growth in India began with market liberalisation policies in the 1990s and the Indian economy has seen consistent growth with some small slumps since. The most dramatic growth has been in the last decade under Prime Minister Modi as “Modinomics” with consistent annual average growth rate of 6% (Richards, 2024). Modi’s tenure has also led to innovations in the modernisation of Indian society such as Indias digital revolution and huge infrastructure projects (Inamdar, 2024). Under Modi India has continued its trend of transitioning away from an agricultural centred economy towards becoming more service based, this transition has meant India has avoided intense industrialisation and shot straight into being a tech hub with an evolving middle class (Finger et al, 2025).

Despite this impressive growth there continues to be significant challenges to Indian society such as widening inequality and increasing youth unemployment and poor education. The richest in Indian society have seen impressive increases in their wealth as the economy has grown, however, Indias poorest are in many cases getting poorer. For example, real wages haven’t increased significantly since 2014 and in 2022 the top 1% of Indians held 22.5% of the country’s wealth whilst the bottom 50% held just 15% (Inamdar, 2024; Richards, 2024). These figures emphasise the unequal nature of Indias rise as a developed economy. The GDP per captia in 20224 was still six times smaller than China’s and the money spent on private purchases has slowed (Inamdar, 2024). India’s youth continues to be a significant challenge to the countries leadership as while having such a demographically young population is key in economic development, youth unemployment and persistent problems in Indian education plagues the economic potential of Indias youth. For example, “The share of educated youths among all unemployed people increased from 54.2% in 2000 to 65.7% in 2022 according to latest figures by the International Labour Organization” (Inamdar, 2024). The poor investment in education during Modi’s tenure has led to consistently poor results in producing high potential human capital, for instance “A quarter of those aged 14 to 18 can't read simple text fluently, according to a report published by the non-profit Pratham Foundation” (Inamdar, 2024). These figures signal a very different Indian story than what real GDP growth is able to, and it provides an honest picture of India’s problems as it climbs the ladder of the world largest economies.

The rise of Indias economy has been compared to that of an Elephant, slow to get going but once its running, its unstoppable (Singh, 2025). This may very well be true, Indias boom indicates hundreds of millions of people may be lifted out of poverty by 2040 and its emerging urban middle class may become a consuming powerhouse, yet many questions over Indias future remain (Singh, 2025). How will India deal with its large wealth disparities and poor per capita GDP when contrasted with comparable economies? Will Modi’s tenure fix problems surrounding Indias youth and curb the brain drain plaguing the Indian tech sector? (Sharma, 2025). In conclusion, if vital issues in Indian society are addressed and a developed modern India is successfully implemented, India’s enormous economic growth has provided a promising platform for the country to thrive in coming decades.

Written by - Alexander Jackson

Position - Vice President

Date - 30/12/25

References

Nikhil Inamdar (2024) “India's economy: The good, bad and ugly in six charts.” BBC News.

Harald Finger & Nujin Suphaphiphat (2025) “India’s Path to Becoming One of the World’s Largest Economies.” Econofact.

Danny Richards (2024) “India’s economy: A compelling growth and investment story but challenges remain.” AXA IM.

Sarwant Singh (2025) “India’s Economic Juggernaut on Way to Becoming The 3rd Largest Economy.” Forbes.

Ananya Sharma (2025) “India’s Lost Talent: Analysing Brain Drain and its Impact.” THE GEOSTRATA.