Ira Singh
Khabar Khabaron Ki,01 April’25
In the span of just 10 years, India has achieved a remarkable feat—its Gross Domestic Product (GDP) has doubled from $2.1 trillion to a projected $4.3 trillion by 2025. This incredible surge is a testament to India’s resilience and growth potential, even in the face of global challenges such as the COVID-19 pandemic. But how did this happen? What has driven India’s economic engine, and what can the world learn from this rapid transformation?
India’s Meteoric Rise: How Did We Get Here?
According to the latest International Monetary Fund (IMF) data, India’s nominal GDP has grown by 103.1% over the past decade. This puts India on track to become the world’s third-largest economy within the next few years. In 2015, India was ranked as the world’s 10th largest economy. Fast forward to 2021, and it had already secured the 5th position, surpassing other major economies.
So, what are the key factors behind this rapid growth? Economists suggest a combination of government reforms, a resilient agricultural sector, robust industrial expansion, and an evolving services sector. But, let’s delve deeper.
Government Policies: The Backbone of Growth
One of the most significant drivers of India’s economic rise has been the series of government policies and reforms. For example, the ‘Make in India’ initiative, the Goods and Services Tax (GST), and the Production-Linked Incentive (PLI) schemes have spurred the manufacturing sector.
According to Madan Sabnavis, Chief Economist at Bank of Baroda, these initiatives have created a conducive environment for businesses to thrive.“In the past decade, the government has facilitated ease of doing business, ensured transparency through digitalization, and enhanced policy frameworks for small and medium-sized enterprises (SMEs),” Sabnavis explains. “This has led to an increase in industrial output, investment, and job creation.”
The Resilient Agricultural Sector
Despite unpredictable weather patterns and climatic challenges, India’s agriculture sector has shown resilience. This stability has been crucial in maintaining rural incomes and ensuring a steady supply of food and raw materials for the industrial and services sectors.
The Services Sector: A Key Economic Driver
The services sector has been another engine of growth. In particular, India’s global footprint in the IT and software industries has expanded significantly, contributing to a surge in service exports. According to experts, the rapid digitization of India’s economy, combined with global demand for tech services, has strengthened this sector.
The emergence of global capability centers has also shifted India’s export composition, with manufactured goods and services leading the charge.
FDI and Investment Influx
India has seen a substantial inflow of Foreign Direct Investment (FDI), which has been critical for boosting the capital needed for infrastructure development. Radhika Rao, Senior Economist at DBS Bank, reportedly noted that “a strong focus on capital expenditure, both by the government and private sector, has driven infrastructure projects and boosted sectors like real estate and construction.”
The Digital Revolution: Efficiency Meets Innovation
The role of technology cannot be overstated. The expansion of digital infrastructure has streamlined payment systems, improved credit delivery, and reduced costs. It has not only empowered businesses but also provided a level of transparency that has built investor confidence. “India’s digitalization story has been pivotal in reducing inefficiencies and promoting greater financial inclusion,” notes Sabnavis.
Challenges Ahead: Can India Sustain This Growth?
While India’s rise has been nothing short of extraordinary, experts warn that challenges remain. As India nears the $4.3 trillion mark and continues to grow at a projected 6.5% annually, maintaining this momentum will require careful management of fiscal and monetary policies.
The country’s external trade dynamics are also evolving. There has been a noticeable increase in the export of manufactured goods, which, combined with strong service exports, is helping improve the country’s trade balance. However, as global trade dynamics shift, India must remain vigilant in adapting to potential trade barriers, such as rising protectionism or US tariffs.
What’s Next for India?* The Road to $10 Trillion
India’s trajectory suggests that it could surpass Japan as the world’s 4th largest economy by 2026, and potentially become the third-largest by 2028. But is this growth sustainable? According to the IMF, the country’s strong fundamentals—supported by proactive policies, infrastructural development, and a growing consumer market—will continue to propel it forward. The real question is how quickly India will bridge the gap to the top two economies, the US and China, and whether its economic strategies will hold up in an increasingly uncertain global environment.
As the economy evolves, India faces a critical juncture. The country must continue to invest in education, infrastructure, and innovation, while managing its fiscal health and adapting to an unpredictable global economic landscape. If it does, India could be on track to become a $10 trillion economy by 2032—one of the largest in the world.
A Global Leader in the Making?
India’s transformation is one of the most impressive economic stories of the 21st century. With a growing, youthful population, an expanding middle class, and a burgeoning digital economy, the country seems poised to continue its rise. The question now is not whether India will become a global economic powerhouse, but rather how soon it will join the ranks of the world’s most influential economies.