Why only someone very ignorant can think that Indian economy is dead

India Today

3 days ago

India's economic ascent in recent years has positioned it as a global powerhouse, standing tall amidst a turbulent world economy. With a unique blend of robust GDP growth, stable macroeconomic fundamentals, and strategic sectoral advancements, India is not only the fastest-growing major economy but also one of the most resilient. There are several key drivers behind India's economic strength, supported by compelling data points and emerging opportunities that underscore its enduring momentum. An honest perusal of these key parameters will exorcise the farcical claim by India's Leader of Opposition (LoP) that the Indian economy is dead. What will emerge is a picture to the contrary.advertisementUnmatched GDP Growth and Global StandingIndia's GDP growth has consistently outpaced that of other major economies, cementing its status as a global economic leader. In FY24, India's real GDP grew by an impressive 8.2%, surpassing the growth rates of major economies like the United States (2.5%), China (5.2%), Japan (1.9%), and Germany (0.3%). For FY25, the International Monetary Fund (IMF) projects India's growth at 6.5–7%, revised upward from 6.6% due to strong rural demand and government infrastructure spending. This makes India the fastest-growing major economy, with projections indicating it will maintain this position through FY26, with GDP growth expected between 6.3–6.8%.By 2027, India is forecasted to overtake Germany to become the world's third-largest economy, with a projected GDP of $5.2 trillion. By 2030, this figure is expected to reach $7.3 trillion, driven by robust domestic demand, a young demographic, and sustained economic reforms. India's contribution to global economic growth is projected to be 12.9% over the next five years, surpassing the United States' 11.3%. This trajectory highlights India's ability to thrive despite global headwinds, such as geopolitical tensions and trade uncertainties.Manufacturing PMI: A Beacon of Industrial Strength
India's manufacturing sector is a cornerstone of its economic resilience, as evidenced by the S&P Global India Manufacturing Purchasing Managers' Index (PMI). In August 2023, the PMI stood at 58.6, reflecting robust expansion driven by strong demand, competitive pricing, and increased new orders—the fastest upturn since January 2021. For FY24, manufacturing growth reached 9.9%, significantly contributing to Gross Value Added (GVA) growth of 7.2%. Most recently, the PMI showed robust growth, with a high of 59.2 in July 2025, marking the highest reading in nearly 17.5 years, reflecting strong demand and output.This performance underscores India's growing industrial capacity, bolstered by initiatives like the Production Linked Incentive (PLI) Scheme, which has attracted investment in pharmaceuticals, electronics, and automobiles.Despite global supply chain disruptions, India's manufacturing sector has shown remarkable adaptability. The sector's contribution to GDP, though currently at 13%, is poised for growth through policies like 'Make in India,' which aims to elevate it to 25%. Companies like Apple are shifting production to India, with iPhone manufacturing for the U.S. market increasingly moving from China. This trend signals India's emergence as a global manufacturing hub, enhancing its economic stability.Low Inflation: A Pillar of Economic StabilityIndia's ability to maintain low inflation amidst global volatility is a testament to its prudent monetary policies. In March 2025, the Consumer Price Index (CPI) inflation rate was 3.34%, down from 4.85% the previous year. This decline, driven by stable food prices and lower crude oil costs (projected at $65/barrel in FY25), has bolstered purchasing power and economic stability []. The Reserve Bank of India's (RBI) steady interest rate policy and potential rate cuts of 25 basis points in FY25 further support growth by encouraging credit and investment.advertisementCompared to advanced economies grappling with high inflation—such as the U.S. (3.0% in mid-2023) and the Eurozone (5.3%)—India's low inflation rate provides a competitive edge, fostering consumer confidence and sustaining domestic demand []. This stability is crucial for long-term economic resilience, especially in a global environment marked by inflationary pressures.High FDI Inflows: A Vote of Global ConfidenceForeign Direct Investment (FDI) inflows into India have surged, reflecting global confidence in its economic potential. Between April 2000 and December 2024, cumulative FDI equity inflows reached $1.05 trillion, with $71 billion recorded in FY24 alone. Key sectors like finance, banking, insurance, and R&D have been major recipients, with Maharashtra (31%) and Karnataka (21%) emerging as top destinations. Singapore, Mauritius, and the U.S. account for significant shares, with 25%, 24%, and 10% of inflows, respectively.advertisementIndia's liberalised FDI regime, allowing 100% foreign investment in sectors like construction and renewable energy, has been a game-changer. The rise of Indian unicorns—108 by mid-2023, with 44 achieving unicorn status in 2021—has further attracted global investors. However, a dip in net FDI to $0.35 billion in FY24 due to increased outward investments highlights the need for sustained policy efforts to maintain inflow momentum. Nonetheless, India's ability to attract substantial FDI underscores its appeal as a stable and lucrative investment destination.Economic Opportunities in Tier 2 and Tier 3 CitiesIndia's economic growth is not confined to metropolitan hubs; Tier 2 and Tier 3 cities are emerging as vibrant centers of opportunity. Cities like Jaipur, Indore, Surat, and Coimbatore are witnessing rapid infrastructure development, driven by initiatives like the UDAN regional airport scheme, which plans to build 20 new airports, and the Ganga Expressway, enhancing connectivity in Uttar Pradesh. These projects are unlocking economic potential by improving logistics, boosting tourism, and attracting businesses.The Smart City Mission and Atal Mission for Rejuvenation and Urban Transformation are fostering sustainable urban development in these cities, creating jobs and stimulating local economies. For instance, Hyderabad's tier-4 data center, with 1,600 racks and 18MW capacity, highlights the growing digital infrastructure in Tier 2 cities. The public cloud services market in India is projected to reach $13 billion by 2026, with a CAGR of 23.1%, driven by demand in these regions. This decentralization of economic activity reduces regional disparities and enhances India's overall economic resilience.advertisementGreen Shoots: Renewable Energy and Space TechnologyIndia's focus on green shoot sectors like renewable energy and space technology is propelling its economic transformation. In renewable energy, India is targeting 100 GW of solar capacity by 2025, alongside investments in wind, hydropower, and green hydrogen. The India Green Energy Corridor and Green Hydrogen Mission align with the goal of net-zero emissions by 2070, positioning India as a global leader in clean energy. Two-thirds of new energy consumption is expected to come from renewables, reducing reliance on imported fossil fuels and creating jobs in manufacturing and infrastructure.In space technology, India's achievements, such as the Chandrayaan-3 lunar mission and the upcoming Gaganyaan human spaceflight program, have elevated its global standing. The Indian space sector is projected to grow from $8 billion in 2023 to $44 billion by 2033, driven by private-sector participation and government support []. Initiatives like the Indian Space Research Organisation's (ISRO) partnerships with startups are fostering innovation and economic diversification, further strengthening India's growth narrative.advertisementAdditional Pillars of ResilienceBeyond these key drivers, India's economic strength is bolstered by several other factors, such as India's Demographic Dividend. With 17.8% of the global population and a growing working-age cohort, India is set to overtake China's working-age population share by 2030. This demographic advantage fuels consumption and productivity.On the Digital Transformation front, initiatives like IndiaStack and Aadhaar have digitised financial transactions, with the credit-to-GDP ratio expected to rise from 57% to 100% by 2031. This enhances financial inclusion and economic efficiency.When it comes to infrastructure push, the Modi government's record-breaking Rs. 11 lac crore capital expenditure in the last two successive financial years has driven projects like the Bharat Expressway and Sagarmala 2.0, improving connectivity and trade.India's banking sector has shown remarkable stability, driven by reforms. Gross non-performing assets (NPAs) fell to a 12-year low of 2.6% in FY24, reflecting a robust financial system.Challenges and the Path ForwardDespite its strengths, India faces challenges, including a skills gap and a manufacturing sector that needs to further scale up. Structural reforms, such as those in agriculture and labour, are critical to sustaining high growth. The government's National Manufacturing Mission and focus on skill development aim to address these gaps, but consistent implementation is key.India's economy today is stronger and more resilient than ever, driven by robust GDP growth, a thriving manufacturing sector, low inflation, high FDI inflows, and burgeoning opportunities in Tier 2 and Tier 3 cities. Emerging sectors like renewable energy and space technology, combined with a favourable demographic and digital transformation, position India as a global economic leader. As it navigates challenges with strategic reforms, India's trajectory toward becoming the world's third-largest economy by 2027 is not just a possibility but an inevitability. With visionary governance and sustained momentum, India is poised to shape the global economic landscape for decades to come.(Tuhin A Sinha is a national spokesperson of the BJP, and an author)- Ends(Views expressed in this opinion piece are those of the author)Must Watch