India's Growth Story

Despite India’s Growth which had impressive show in the mid-2000s, the long-term magnitude and sustainability of this progress remains uncertain. India’s rapid population expansion requires that the country sustain long-term growth to enable job creation over time. For the country to achieve this enduring trajectory, India must correctly identify the economic fundamentals behind such growth. This should include both short-term, cyclical barriers and long-term, structural impediments that hold it back. Articulating a set of policy priorities and guiding principles that address these issues is the best way forward for India’s future economic prospects.  

India’s Growth | Hurdles


India’s high-growth phase of 2003–2008 had much to do with growth-friendly global economic conditions that have since run their course.

  • The country’s domestic structural deficiencies—namely poor human resource capabilities; a narrow and predominantly informal industrial base; and a fragmented, low-productivity primary sector—keep a lid on growth and a floor on inflation.
  • India also faces formidable long-term headwinds due to premature deindustrialization, the limitations of a services-led growth model, the plateauing of global trade, stagnation in developed economies, and the costs associated with climate change.
  • The country’s state capacity deficiencies amplify the effects of these constraints.
  • These hurdles must be seen in light of favourable tailwinds such as low commodity prices, China’s economic slowdown, and India’s relative attractiveness as an investment destination.

India’s Growth | Solutions for India

  • India needs to brand itself worldwide, like the way Dubai does on a consistent scale of time.
  • It also needs to clear few internal issues first – promote acceptance than mere tolerance, ensuring safety and security of all people on its land, recognition of cultural diversity and skill development of each and every hand volunteering for work.
  • India has a strong democratic tradition which can be advantageous if reaped well with continuity of policies. It could act as a boon in the fight against corruption too.
  • Demographic dividend can be reaped through the focus on education and vocational training by modification and replication of best international practices.
  • India needs to focus on raising standards of living of its populace which needs to be in sync with the striking down of rural and urban divide. Large scale urbanisation is being planned but rural to urban migration and overload on cities can be controlled only by providing effective employment avenues and raising standards of rural India. A democratic India cannot afford urban anarchy.

India’s Growth | The way forward

  • Embrace a feasible growth model – Lasting economic progress is best achieved by realistically assessing India’s structural impediments and growth potential. The government must accept that sustained growth rates of 8 percent or more are likely out of reach, and it should resist short-term growth strategies that rely on bubbles and fads by instead promising less and delivering more. The government should vigilantly steer clear of both state-led import substitution and overreliance on market-based policy prescriptions.
  • Prioritize growth-friendly policies The Indian government should pursue reforms in the areas of higher and lower education; urban governance; housing, land, credit, and labor markets; and infrastructure contracting. It should also seek to shrink the informal economy and expand the tax base, while also improving state capacity and personnel management.
  • Foster greater federalism Indian states should be allowed to engage both cooperatively and competitively with the central government and with each other. Proactive bottom-up actions by state governments will be needed to effectively scale up the fragmented agricultural sector and industrial production.

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