By Sandeep Vempati, The author is an economist and columnist, and a member of the Bharatiya Janata Party
More than a decade ago, India was dismissed as a Fragile Five economy waiting to collapse. By 2025, the narrative has fundamentally changed: India has been the fastest-growing large economy since Covid-19 and is projected to be so until 2030. While global growth is slowing down and large economies are either reeling under a debt burden, inflation, or growth issues, not only is India’s significant share in global growth likely to increase but the country is also viewed as a global bright spot in terms of growth rate.
India has also trebled the size of its economy and moved up from 11th to fourth-largest as it raced past Japan recently. Soon it would be the third-largest. Its fiscal prudence and macroeconomic stability led to a credit rating upgrade from S&P after 18 years. Even Indian bonds are included in global indices. This economic transformation, initiated when Narendra Modi assumed leadership in 2014, is centred on a sustainable growth paradigm.
This paradigm rests on five foundational pillars and five strategic frontiers. These are safeguarding the citizens and sovereignty; sustained focus on environment and climate change; safety of health, education, social security, and skilling citizens; stable and resilient macroeconomy; and not the least, stability and continuity of leadership and effective governance.
The foundational pillars are prerequisites for the growth paradigm, being realised along five strategic frontiers. The first frontier is spreading growth through inclusivity and balanced regional development. Fundamental to realising growth along this frontier is poverty elimination; 250 million have escaped multidimensional poverty in the nine years to 2022-23.
Poverty elimination initiatives were supplemented by income earning opportunities. Credit linkage of self-help groups, formalisation, and cash-flow based lending to micro-enterprises, PM Mudra Yojana, Stand-Up India, PM SVANidhi and PM Vishwakarma are ensuring capital is available to deprived sections and the informal sector, while the Open Network for Digital Commerce and GeM portal offer market access. Agriculture and cooperative initiatives like the National Cooperative Policy 2025 are also ensuring broad inclusion.
Balanced regional development is not only a political necessity but also an economic necessity, as the costs of migration and concentration in a few economic centres are very high. Aspirational districts and blocks, Smart Cities Mission, integration of Jammu and Kashmir, increased focus on the Northeast, border village, and Mission Purvodaya are efforts to step up development in these neglected regions. The goods and services tax (GST) rollout, infrastructure development, and industrial corridors are extending manufacturing beyond traditional hubs.
Steady reform is the next frontier. Modi’s economic agenda is defined by a consistent push for reforms with a commitment to improve the business climate, lower costs, and foster investment and innovation. This would make businesses competitive. The decade of reforms spanned across sectors. While GST, flexible inflation targeting, and labour codes count as structural reforms, the Income Tax Act 2025, Insolvency and Bankruptcy Code, Real Estate (Regulation and Development) Act, bank recapitalisation, formalisation, deregulation commission, and improving quality of spending are significant reforms.
Strengthening domestic manufacturing, including securing supply chains and global market access, is the third frontier. The share of manufacturing is holding steady at 18% in real terms due to domestic demand, structural reforms, infra development, Make in India, production-linked incentives, and free trade agreements (FTAs). Also, India has become a net exporter of defence, toys, and mobiles. By expanding to sunrise sectors, forging more FTAs, and securing energy commodities, critical minerals, and inputs, India intends to raise the share of manufacturing to 25%.
The fourth is focus on R&D, innovation, and fostering productivity growth. India’s labour productivity in value-added terms has nearly doubled, partly explained by structural reforms, a skilled workforce, and increasing share of allied activities in primary sectors, and high-tech manufacturing and services. Even an incremental capital output ratio is seeing a decline and contributing to the stability of current account deficit in a capital-deficit economy. The `1 lakh-crore Research Development and Innovation scheme will foster private sector R&D, reduce import dependence, and strengthen domestic high-tech manufacturing.
The fifth is support for sunrise sectors, as these contribute to growth, employment, climate change goals, and manufacturing by reducing import reliance and building robust global supply chains. Global capability centres, AI, tourism, food processing, wind, solar, electric vehicles, bio-fuels, green hydrogen, biotech, space-tech, fintech, quantum computing, and semiconductors are receiving a thrust.
Modi’s exceptional economic performance, from design to delivery, realised via the sustainable growth paradigm, is guided by the strategic imperative of self-reliance. It serves as the central organising principle that integrates all foundational pillars and strategic frontiers. Rather than promoting isolationism like past models of autarky, this strategy emphasises building domestic capabilities while engaging competitively in global markets.
Active management of economy based on self-reliance and sustainable growth while leveraging the demographic dividend would steer clear of likely challenges including a middle-income trap. It would position India as a developed nation by 2047, one that shapes the global economy.