Rising Power: India’s Economic Ascent and Challenges

India’s recent milestone of overtaking Japan to become the world’s fourth-largest economy, with a GDP of $4 trillion, is a testament to its steady economic progress. This achievement, highlighted by NITI Aayog CEO BVR Subrahmanyam, reflects the resilience and potential of an economy. The IMF projects India’s growth to be at 6.2% in 2025, even as global uncertainties persist. With ambitions to become a $10 trillion economy by 2035 and a $30 trillion developed nation by 2047, India’s trajectory seems promising. Yet, these macro figures mask stark ground realities—persistent inequality, unemployment, and poverty—raising questions about inclusive growth.

India’s economic history is a tale of resurgence. Before colonial rule, it accounted for nearly 25% of global GDP, but the wealth drain under British rule reduced it to a struggling economy. Socialist policies post-1947, while well-intentioned, led to the "Hindu Rate of Growth"—a stagnant 3-4% annual GDP expansion for decades. The 1991 liberalisation reforms marked a turning point, unleashing private enterprise and global integration, setting the stage for today’s ascent.

The numbers themselves are impressive. India’s nominal GDP has doubled from $2.1 trillion in 2014 to $4.2 trillion in 2024, and per capita income has risen from $1,438 to $2,880 in the same period. This growth, fueled by demographic dividends, digital transformation, and policy reforms like GST and production-linked incentives, positions India as a global bright spot. The government’s "Viksit Bharat 2047" vision outlines strategic interventions across six pillars, including technology leadership and sustainable development, aiming to elevate India to a high-income status.

However, the celebration of aggregate growth must be tempered by the lived experiences of millions. Despite being the fourth-largest economy, India ranks 134th in per capita income (World Bank, 2023), highlighting the disparity between size and prosperity. Unemployment remains a concern, with the Centre for Monitoring Indian Economy (CMIE) reporting a 7.6% jobless rate in early 2025. Informal sector workers, who constitute over 80% of the workforce, face precarious conditions, and rural distress persists due to agrarian challenges. The World Inequality Lab notes that the top 1% of Indians hold 40% of national wealth, underscoring deep inequities.

The $10 trillion aspiration demands more than GDP expansion—it requires addressing structural flaws. Skilling the youth, boosting manufacturing (currently 17% of GDP), and improving ease of doing business are critical. Equally vital are investments in health, education, and social safety nets to ensure that growth benefits all. As economist Jean Drèze warns, "Growth without redistribution is like a train leaving behind most passengers."

India’s economic rise is undeniable, but its true test lies in translating macro gains into micro welfare. The journey to $10 trillion must bridge the gap between boardrooms and villages, ensuring prosperity is shared, not just showcased.