India, a country of over 1.4 billion people with rich cultural diversity and a vibrant democratic framework, is at the forefront of global economic discussions. India has made remarkable strides on the world stage, from its bustling streets to its thriving tech hubs. This article tries to answer the question- India Growth Story-Real or Fake?

Headlines often suggest that the country is destined to become the next superpower. But is this growth narrative rooted in reality, or is it a product of hype? Let’s explore the multifaceted dimensions of India’s growth story to determine whether it is as promising as it seems.

We will discuss some of the most important economic and social indicators of Gross Domestic Product (GDP), Economic Equality, Debt, Innovation and Technology and Corruption, in order to decipher the question of India Growth Story-Real or Fake?

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Gross Domestic Product (GDP)

India’s GDP has grown tremendously over the past 15 years, increasing from $1.2 trillion in 2008 to $3.55 trillion in 2023, making it the fifth-largest economy in the world, behind the USA, China, Germany, and Japan.

What is GDP?
GDP, or Gross Domestic Product, measures the total value of goods and services produced in a country over a specific time period. It serves as a key indicator of a nation’s economic health.

GDP vs. GDP Per Capita

While GDP highlights the economic prowess of a country, GDP per capita provides a clearer picture of individual economic participation and living standards.

It gives a broader picture of the average living standards in a country.

GDP per capita = GDP/ Total Population

So, GDP per capita gives the economic output per person of a country.

However, countries with existing low levels of GDP per capita, such as nations in Africa, and rapidly increasing populations combined with little GDP growth can experience a steady erosion of living standards India has a low GDP per capita as compared to other top countries in the world

Unfortunately, India’s GDP per capita remains among the lowest compared to major economies. At $2,484.85 in 2023, it lags far behind countries like the USA ($81,695.19) and China ($12,614.06).

This disparity underscores the challenges India faces:

• High Population Impact: India’s massive population dilutes its GDP per capita.
• Economic Inequality: Wealth and income are concentrated among a small elite, leaving a large portion of the population economically inactive or underemployed.
• The Economic Divide: Wealth and Income Inequality
• Economic disparity in India is stark. Data from the World Inequality Lab and Ray Dalio Power Index reveals that:

Let us check the GDP per capita of the major countries in the world and compare them with that of India.

This time India is at the bottom of the list. It has a low GDP per capita also because of its large population. The more the population of a country, the lesser its GDP per capita.

But compared to China, India’s GDP per capita is almost 1/6th. However, the population of India is almost the same as that of China.

This means the economic output of people in China is almost 6 times that of people in India. Hence, India can either focus on controlling its population or rather work on increasing the economic output per capita/person.

I understand that the GDP per capita indicates the participation of individuals of a country in economic activities and production.

Having an increasing population and less GDP per capita means that the economic participation of the individuals of the country is less. Economic participation is low. Incomes are low and not well distributed.

Living standards are low for the majority of the population.

Below is the graph of the GDP, GDP per capita and population of these 11 countries.

Let us check India and China. Both have similarly large population. However, the GDP per capita of China is almost 6 times that of India.

The population of India is almost 20 times that of UK. However, the GDP of India is merely 1.06 times that of UK. Add to it, the UK has a GDP per capita that is almost 20 times that of India.

This does mean that:

1. India needs to better capitalize on its population.
2. The GDP of India is high, although the GDP per capita is low, since the economic productivity is concentrated to a faction of the population of the country as compared to other top countries. Hence, more participation is needed from the population of India.

Economic Disparity

The low GDP per capita is also well depicted in India’s economic disparity or economic inequality.

Economic disparity is when the wealth and income are not well distributed among a country’s population. It means that a small fraction of the population owns a large part of the wealth of the country.

For India, it is the case.

The top 1% of Indians own 32% of the nation’s wealth.
The top 10% control 64% of the wealth, while the remaining 90% hold just 36%.

Source: Ray Dalio Power Index

This imbalance has persisted over the last decade, despite modest improvements in wealth distribution. Such inequality restricts the benefits of growth to a select few, leaving the majority with lower living standards and limited economic opportunities.

Hence, it is evident that income and wealth are not handsomely distributed among the population in India. The richest in India own the majority of the wealth and income.

However, to check the India growth story we should check the trend. We can check the trend of wealth distribution in the last 10 years or so.

As you can see in the above chart, the wealth owned by top 1% of the population has not seen any significant reduction in these 10 years since 2012.

Similarly for the top 10% of the population, the wealth distribution has not seen any significant changes.

“Hence, India needs to work more on distributing wealth among its overall population. The rich are getting richer, while the poor remain poor.”

Debt Dynamics: Manageable but Concerning

India’s debt-to-GDP ratio stood at 81.59% in 2023, up from 66.65% in 2012. While this ratio is manageable compared to global standards, prolonged periods of high debt levels (above 77%) can slow economic growth. Notably: The government debt accounts for 84% of GDP.

Having a high Debt-to-GDP ratio means, the Government has to divert a majority of its revenue from taxes and other means into paying off debts and debt interests. World Population Review has reported that countries whose debt-to-GDP ratios exceed 77% for prolonged periods experience significant slowdowns in economic growth.
Source: World Population Review. “Debt to GDP Ratio by Country 2024.

Household debt remains relatively low at 38%, and corporate debt is at 56%.
95% of this debt is denominated in Indian currency, reducing exposure to external financial shocks.

It has increased in the last 10 years.

We can also compare it with the major countries and can observe, that India has the lowest debt-to-GDP ratio in the major countries taken into consideration.

Collapsing infrastructure

India has experienced several significant infrastructure collapses in recent years, highlighting challenges in construction quality, maintenance, and regulatory oversight. Notable incidents include:

Delhi Airport Roof Collapse (June 2024): A section of the roof at New Delhi’s Terminal 1 collapsed following heavy rainfall, resulting in one fatality and significant damage. This incident raised concerns about the rapid pace of infrastructure development and the quality of construction.

Reuters

Jabalpur Airport Canopy Collapse (June 2024): Part of the canopy at Jabalpur Airport in Madhya Pradesh collapsed after heavy rains. The new terminal, inaugurated in March 2024, had cost $50 million, and its failure shortly after opening highlighted issues in construction practices.

Reuters

Mizoram Bridge Collapse (August 2023): An under-construction railway bridge in Mizoram collapsed, killing at least 26 laborers. The incident underscored the risks associated with rapid infrastructure development without stringent safety measures.

Wikipedia

Morbi Bridge Collapse (October 2022): A 143-year-old suspension bridge in Morbi, Gujarat, collapsed, resulting in 141 deaths. The bridge had recently reopened after renovations, and investigations pointed to overloading and poor maintenance as primary causes.

Wikipedia

Uttarakhand Tunnel Collapse (November 2023): A section of the Silkyara Bend–Barkot tunnel in Uttarakhand collapsed during construction, trapping 41 workers. Rescue operations lasted 17 days, bringing attention to the challenges of building infrastructure in geologically sensitive areas.

WikipediaBengaluru Building Collapse (October 2024): A seven-story building under construction in Bengaluru collapsed during heavy monsoon rains, killing at least five workers. The incident highlighted issues related to construction quality and regulatory enforcement.

AP News

Bihar Bridge Collapses: Bihar has seen multiple bridge failures in recent years, including 12 collapses within just two weeks in 2024. These incidents have been attributed to poor construction quality and lack of supervision. Notable among them was the Aguwani-Sultanganj Bridge collapse in Bhagalpur?

Times of India

India Today

?  Mizoram Railway Bridge Collapse: In August 2023, an under-construction railway bridge in Mizoram collapsed, killing 26 workers. The incident underscored concerns about engineering oversight in large-scale infrastructure projects?

Times of India

?  Delhi Airport Roof Collapse: The roof of Terminal 1 at Delhi Airport partially collapsed in June 2024, causing injuries and drawing attention to substandard materials used in critical projects?

Times of India

Kolkata Flyover Collapse (2016): Although slightly older, the Vivekananda Road flyover collapsed in Kolkata, which resulted in 27 fatalities, remains a stark reminder of the risks posed by rushed or compromised construction practices?Times of India

Despite these factors, India’s growing economy and robust fiscal policies provide hope for better debt management in the future.

Technological Advancements: A Digital Revolution

ICT Services Exports

India has emerged as a global leader in ICT (Information and Communication Technology) services, exporting over $163 billion in 2023. This accounts for 60% of the gl¹obal outsourcing market, supported by a large, skilled workforce and cost advantages. Major players like TCS, Infosys, and Wipro have spearheaded this sector’s growth.

India is the largest ICT services exporter only after Ireland. This is also due to the cheap and quality labor market in India.

The top ten ICT services exporters in 2022 as per the “World Integrated Trade Organization (WITO)”

Digital Payments and Transformation

India’s digital transformation is exemplified by innovations like the Unified Payments Interface (UPI), which facilitated $1.5 trillion in transactions in 2022. Initiatives such as the Account Aggregator framework are further democratizing access to financial services, fostering inclusivity and entrepreneurship.

India is ranked 3rd globally as per the “State of India’s Digital Economy” (SIDE) 2024 report. It trails only the US and China, based on parameters like digital infrastructure, innovation, and public sector engagement. However, in terms of individual-level digital adoption, it ranks 12th among G20 countries.

The top 10 countries with their CHIP(S) score are

Increase in Global Patent Applications We have witnessed a three times growth in the number of global patent applications and stand at rank 6th globally²

Challenges in Technology
Despite progress, rural digital penetration, low R&D spending, and limited global patent filings are barriers to India’s technological dominance. The country needs to address these gaps to sustain its digital growth trajectory.

Corruption: A Persistent Challenge

India ranked 93rd out of 180 countries, slipping from 85th in 2022, with a score of 39 out of 100³ (0 being highly corrupt, 100 being very clean). This marks a slight decline from the previous year’s score of 40.

Comparatively, nations like New Zealand (1st, score of 85) and Singapore (2nd, score of 83) lead in combating corruption through robust institutional frameworks.

Political Influence and Narrowing Civic Space⁴: The shrinking space for civil society and press freedom has exacerbated corruption issues, especially ahead of elections.

Corruption disproportionately affects marginalized communities, hindering equitable access to public services and resources. Institutional reforms and stronger anti-corruption frameworks are essential for improving public trust and efficiency.

Corruption often goes unchecked due to inefficiencies in the judicial system and the inability to hold government officials accountable.

These rankings underscore the need for stronger enforcement of anti-corruption laws, judicial reforms, and greater transparency in governance to improve India’s standing

India Growth Story-Conclusion

India’s growth story is a complex interplay of achievements and challenges. While the country has made significant strides in GDP growth, ICT exports, and digital innovation, persistent issues like income disparity, corruption, and human development must be addressed. The narrative of India as the next superpower is not unfounded, but it requires sustained effort, inclusive policies, and structural reforms to translate potential into reality.

India’s growth story is real, but its ultimate success hinges on the collective ability to overcome systemic challenges and create a more equitable, innovative, and resilient economy.

Key Challenges Ahead

• Population Management: With a population nearing 1.4 billion, India must address unemployment, urban congestion, and resource allocation.
• Economic Inclusion: Increasing GDP per capita and reducing income inequality are critical for sustainable growth.
• Sustainability: Environmental concerns, water scarcity, and pollution need immediate attention to ensure long-term prosperity.
• Corruption: the need for stronger enforcement of anti-corruption laws, judicial reforms, and greater transparency in governance to improve India’s standing

1. https://www.researchgate.net/publication/383178044_The_percentage_of_ICT_services_exports_relative_to_total_trade ↩︎
2. Intellectual Property Statistics India
   https://www.wipo.int/edocs/statistics-country-profile/en/in.pdf ↩︎
3. Transparency International’s Corruption Perceptions Index 2023 Transparency International. ↩︎
4. The New Indian Express and Hindustan Times for regional and national analysis?20??21? ↩︎