No
India faces significant challenges in achieving the required growth rates to become a rich country before its demographic peak in 2035. The projected actual growth rates of 7.0% in nominal terms and 5.0% in PPP terms are below the required annual growth rates of 18.0% and 5.9%, respectively, needed to reach the rich country threshold of $13,000 per capita by 2035. Additionally, structural constraints such as persistent food inflation, stagnant job growth, and a rising trade deficit hinder India's economic progress. Despite being the fastest-growing major economy, India's current GNI per capita of $2,480.8 (nominal) and $7,340.0 (PPP) indicates a substantial gap to the rich country threshold.
What Is Going Wrong
- India's GDP growth rate is projected at 6.5% for 2025, which is below the required 8% needed to achieve developed status by 2047.
- Only about 20% of India's workforce is employed in the formal sector, with the majority in informal jobs lacking security and benefits. The unemployment rate is 4.2%, with youth unemployment at 15%.
- Manufacturing contributes about 25% to India's GDP, which is lower than the 30-40% seen in many developed economies. The sector's growth is expected to slow significantly, from 9.9% to 5.3%.
- Public capital expenditure has been subdued, with low utilization of capex budgets in key states, hindering infrastructure development.
- Despite a large workforce, over 44% of workers are engaged in agriculture, indicating a structural imbalance in labor distribution. Additionally, food inflation remains high, affecting real wages and consumption.
Key Individuals Responsible
Learn more about the methodology behind the ranking of key individuals.
Narendra Modi (Prime Minister of India) Prime Minister Modi plays a crucial role in shaping India's economic future through initiatives like the Production-Linked Incentive (PLI) scheme, which has attracted ₹5 lakh crore in investments and aims for ₹5 lakh crore in exports across strategic sectors. His administration's focus on financial discipline and regulatory ease is pivotal in fostering a pro-business environment.
Sanjay Malhotra (Governor, Reserve Bank of India) As the current RBI Governor, Sanjay Malhotra influences monetary policy, which impacts inflation management and economic growth. His recent decision to cut interest rates aims to boost a slowing economy, reflecting his role in addressing economic challenges.
Nirmala Sitharaman (Minister of Finance) Minister Sitharaman is responsible for formulating and implementing fiscal policies, including tax reforms and budget allocations. Her recent budgets have focused on stimulating growth through tax cuts and investments in infrastructure.
Parameswaran Iyer (CEO, NITI Aayog) As the CEO of NITI Aayog, Parameswaran Iyer oversees strategic policy initiatives aimed at promoting sustainable development and economic growth. His role involves coordinating with state governments to enhance the ease of doing business and attract investments.
Ashwini Vaishnaw (Minister of Railways, Communications, and Electronics & Information Technology) Minister Vaishnaw's portfolio includes key sectors like IT and communications, which are crucial for India's digital transformation and economic growth. His emphasis on combining manufacturing with high-value services aligns with India's strategy to move beyond low-skilled manufacturing.