18 hours ago
India has the fastest growing number of billionaires. This isn't a good thing: Veerappa Moily
McKinsey Global Institute has quoted in its report—'India needs to increase the relatively low participation of its citizens in labour markets and sustain fast productivity growth as the country has just 33 years until it is as 'old' as advanced economies. 'India still has some time to benefit from its demographic dividend for economic growth but is aging faster than many realize.'
Despite very fast progress, India is still a low-income country. If India is to achieve the status of being the fourth-largest economy by the end of 2025 and to be a real powerhouse in the world, our policies must be transformative.
Citing IMF data, NITI Aayog CEO BVR Subrahmanyam has expressed confidence that India could become the third-largest economy in two and a half to three years. The 2024-25 Economic Survey stated, India will need to improve its global competitiveness through grassroots-level structural reforms and deregulation to reinforce its medium-term growth potential. The survey pitched for less state control and easier rules, stating that lowering the cost of business through deregulation will make a significant contribution to accelerating economic growth and employment amid unprecedented global challenges.
It also said that India is projected to reach the same support ratio (number of working-age individuals per senior 65 or older) in the 2050s as seen in advanced economies, but its GDP per capita is just 18 per cent of the World Bank's high-income threshold. Also, in per capita terms, we are still near the bottom of the global scenario tables—136 in nominal GDP and 119 in PPP terms.
India still has the lowest GDP per capita among G20 nations. Human Development Indicators are still poor, with challenges in education, healthcare, and poverty reduction. Referring to the reports that India is set to pass Japan as the fourth largest economy, Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at Hong Kong investment bank Natixis, said. 'Inequality is also an issue, certainly compared to Japan.'
As of 2023, nearly 45 per cent of India's workforce was still employed in agriculture, while Japan's was at around 3 per cent, with a considerable rise in employment in industrial and service sectors. The share of salaried workers with formal employment contracts was just 23.9 per cent in India, while that of Japan is around 91 per cent. Apart from these criteria, the life expectancy in India is 72, while that of Japan is 84. India's Human Development Index is just 0.685 out of a highest possible of 1. Japan's HDI has crossed the 0.9 mark.
India needs to increase the relatively low participation of its citizens in labour markets and sustain fast productivity growth. Additionally, India is ranked 142 out of approximately 190 countries in terms of press freedom, with a nominal per capita GDP of around $2700.
India's GDP growth of 6.5 per cent in FY 2025 is the lowest since the Covid-19 pandemic of 2020-21. The risk is that a GDP growth of 6.5 per cent will not be able to generate enough jobs to fully absorb the labour force growth. The most worrying factor is that industries are not adding capacity that will generate more jobs. Creating more jobs in the organised sector is also seen as the biggest challenge to the government. Considering the magnitude of joblessness, there is an urgent need to incentivise state governments to improve the business environment and investments, which in turn will augment the labour force and sustain growth.
A growing gap
Surprisingly, India is also home to the largest and fastest growing number of billionaires—India has around 200 billionaires today—third globally in billionaire count. The Economic Survey has also warned of the disproportionate rise in corporate profits concentrated largely among a few large corporations.
No wonder the gap between the rich and the poor, economic inequality and wealth distribution are widening day by day. The imbalance between profit growth and declining wages will have major macroeconomic consequences. If household earnings do not increase, consumer demand will weaken, undermining the very growth of GDP. This depicts the dark side of India's growth story that we are celebrating!
Again, the share of manufacturing in India's GDP in 2023-24 is the same as it was in 2013-14. Where does the PM's favourite 'Make in India' sloganeering stand today? More so, as per the RBI's KLEMS database, the contribution of manufacturing to job creation is lower at 10.6 per cent compared to 11.6 per cent in 2013-14.
As per the data from the PRICE ICE 360 survey, the richest 20 per cent of households, which account for Rs 155 trillion in income, save Rs 57 trillion and consume just 63.6 per cent. The bottom 20 per cent earn Rs 22 trillion but spend Rs 23 trillion, resulting in negative savings and the highest debt-to-income ratio of 15.4 per cent. The middle 60 per cent, earning Rs 159 trillion and saving Rs 28 trillion, are the backbone of consumption but remain economically vulnerable, highlighting a macro-micro disconnect.
To bridge the gap, we need to shift focus from redistribution to empowerment of the bottom 20 per cent—creating job opportunities and skilling youth, affordable insurance, pension schemes, and tax-friendly saving instruments. The bottom 20 per cent must live without the fear of debt traps or income loss.
We also need to look at rationalising GST. The GST council should work out a roadmap for levying petroleum products, electricity and real estate and bring it into the GST regime. Both slabs and rates have to be rationalised. Liberate financial markets to ensure adequate and reasonable business borrowing rates.
RBI should also create a roadmap to phase out the Statutory Liquidity Ratio (SLR), which compels commercial banks to buy government bonds.
Tariffs on intermediate goods and inputs are too high to push manufacturing in India
Roadblocks to growth
The harsh reality faced by millions in the country, with rising inequality, stagnating wages, and weak job creation, should prompt serious introspection by the government. The benefits of the so-called economic growth have been concentrated among a minuscule segment of the population, while the wage earners and informal sector workers continue to struggle. India's ascension to the fourth position in global GDP ranking is masked by foundational cracks in the economy.
According to the International Monetary Fund's 'World Economic Outlook' released in April 2025, India's GDP is projected at $3.91 trillion for FY 25, while Japan is estimated at $4.03 trillion for FY 25. These figures put India in the fifth spot for now. Niti Aayog CEO saying India has overtaken Japan to become the world's fourth-largest economy is premature.
And if India has to overtake Germany to become the third-largest economy in the world, we need to have faster, sustainable, and inclusive growth at all levels. India needs to fast-track the infusion of new technologies and infuse greater investment in research and development both in the government and private sector along with upgradation of human capital with training, skilling and employability.
The current trend is dangerous unless growth translates into better livelihood for people and reduces inequalities.
M Veerappa Moily is former Chief Minister of Karnataka & former Union Minister. Views are personal.
(Edited by Theres Sudeep)
