Transforming India: Why Structural Change is Essential for Achieving Viksit Bharat Beyond Just Economic Growth

On May 30, the Indian economy surprised many with a GDP growth rate of 7.4% for the fourth quarter of 2024-25. This growth was primarily fueled by a comeback in the construction and manufacturing sectors. For policymakers in New Delhi, these numbers were a welcome change from the lower growth of 5.6% seen a few months prior.

Just a few weeks later, on June 16, a government report noted that India has now become the fourth-largest economy globally. This happened thanks to domestic reforms and a strong global stance under the Atmanirbhar Bharat vision. India’s nominal GDP has surged from ₹106.57 lakh crore in 2014-15 to ₹330.68 lakh crore (around $3.84 trillion) in 2024-25.

Despite these promising figures, India is aiming higher. The goal is to be a developed nation by 2047, aspiring to a $30 trillion economy with a per capita income of $18,000 annually. Achieving this means that India’s economy needs to double its size every six years, requiring around a 12% growth rate.

One key milestone will be overtaking Germany to become the third-largest economy by 2030. However, experts warn that the current growth rates—real GDP at 6.5% and nominal at 9.8%—may not be enough.

Anubhuti Sahay, head of economic research at Standard Chartered, emphasized this during a recent discussion in Mumbai. She stated, “To reach our goals, we need to aim for at least an 8% growth rate.” She pointed out that while the corporate sector holds significant cash reserves, it’s not being invested back into the economy. This stagnation impacts wages and, consequently, overall consumption.

Madhavi Arora, chief economist at Emkay Global Financial Services, echoed these sentiments. She highlighted that wages in many sectors have dropped below pre-Covid levels. The lack of strong private consumption is stunting investment. She also noted the delays in capital expenditures which are crucial for long-term growth.

Global uncertainties, like geopolitical tensions, further complicate the landscape. D.K. Joshi, chief economist at Crisil, warned that the growth trend has settled back to around 6.5% to 6.7%.

Indranil Pan, chief economist at YES Bank, pointed out that while government investments have increased since the pandemic, private investments aren’t keeping pace due to varying domestic and global demand.

In summary, while India’s economic recovery is promising, the path to becoming a developed economy is paved with challenges. Experts stress the need for robust investments and wage growth to drive consumption and ensure sustainable growth.



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