As the Indian government presented the report for the financial year 2024-2025, two topics dominated the media coverage. One was that India was still the fastest-growing major economy, and two, according to the IMF, India had surpassed Japan to become the fourth biggest economy in the world.
For the past decade, the “India Story” has been one of the major tropes of contemporary global narrative. The rise of India as a major economy when measured in gross domestic product, or India as a rising power, given the size of its army, its defense budget, and its defense shopping, vindicate this narrative. The size and success of India’s diaspora further adds to the mystique of India’s rise as Indians living abroad are excelling in academia, business, and politics. The CEOs of Google, Microsoft, YouTube and dozens of other major corporations are of Indian origin. A former prime minister of the United Kingdom, albeit briefly, the head of the World Bank, and the new director of the FBI are also of Indian origin. Wherever you look, there are stars of Indian origin shining brightly, echoing the India Story.
However, lately, a “but” is being included in the narrative.
Narendra Modi and his party, the Bharatiya Janata Party, won a third term in office but this time they did not manage to get an absolute majority. India won the most recent military encounter with Pakistan but it may have lost several jets in the bargain. India is a vibrant democracy but the press, academia, and the judiciary are rapidly losing their independence. India is a big and beautiful example of pluralism but under Modi, its record with religious minorities leaves much to be desired.
The “but” is now becoming a standard feature of the India Story.
The India growth story is primarily focused on a few macro indicators, the most prominent of which are gross domestic product (GDP) and international trade. So, while much is made about the growth of GDP and trade, other equally important indicators of development are systematically ignored. The fact that India’s per capita GDP is only around $2,800, the lowest of all the nations in both the G-20 group of nations and the BRICS is never mentioned or discussed by national leaders. On this indicator, India is ranked 143rd out of 194 countries, and even when adjusted for purchasing power parity, India ranks 125th.
On the Human Development Index that balances economic well-being with social and educational indicators of development, India is ranked 130th along with Bangladesh out of 193 nations.
Indian Prime Minister Narendra Modi often brags about India being the “mother of democracy” and the term “largest democracy” is a frequently used signifier in the India story.
But what is ignored is that according to the highly respected Democracy Index, India is not classified as a full democracy. It is rated as a flawed democracy and ranks 41st in the world. India does not fare well on other democracy indicators either. On the World Press Free Index, India ranks 151st. This particular ranking is a shame for a country that claims to have a vibrant democracy. But for a few exceptions, the state has captured much of the mainstream media and there is very little tolerance for dissent or critique.
India is on the verge of becoming the fourth biggest economy in the world. The IMF has forecast that in 2025 India will surpass the GDP of Japan and become the fourth biggest economy in the world after the U.S., China and Germany. Last week India revealed how its economy performed in the financial year April 2024-March 2025. India registered a 7.4 percent growth in its fourth quarter, between January and March, surpassing industry expectations but, and here comes the inevitable but, for the fiscal year 2024-2025 the economy registered only 6.5 percent growth, the lowest in four years. A sharp decline from the previous years’ impressive 9.2 percent. However, even with a lower growth rate India remains the fastest growing major economy thus sustaining the Indian story and distracting from the significant slowing down of growth.
Prime Minister Modi constantly invokes the idea of “Make in India” to talk about India’s push to become a major manufacturing economy. On his website Modi uses self-serving slogans such as “Investors spellbound by Modi Magic” to claim that India was attracting foreign investments moved by the personal charisma of Modi. Increasingly, rhetoric such as this is used to equate the India story with Modi Magic. But again all the aspirational talk of Make in India or Atmanirbhar Bharat glosses over the reality – India is a net importer with a trade deficit in merchandise of $283 billion, and in the eleven years that Modi has been prime minister, the manufacturing sector’s share of GDP has actually declined from around 15 percent in 2014 to 14 percent in 2024-2025. In the year 2024-2025 India’s manufacturing sector’s grew at 4.5 percent while China’s manufacturing, who India hopes to replace, grew at 6.1 percent in 2024.
The growing geopolitical tensions between the West and China is spilling over into the arena of global trade resulting in protectionism, restructuring of global supply chains and much talk of deglobalization. For economic and security reasons, Western countries and companies are looking for alternatives to China. India has been presenting itself as the other China, you know the one with 1.4 billion people, lots of youth, cheap labor and with democracy. But except for the shift in Apple iPhones, Vietnam and Mexico have outdone India in friend-shoring and near-shoring.
India’s growth story has one particularly stark side and that is the state of unemployment. Official figures state that unemployment is at 5.1 percent and youth unemployment is at 13.8 percent but this claim too hides the reality that India uses deceptive concepts such as unpaid employment as a way of hiding the unemployment crisis in the country. India also suffers from a peculiar condition described as underemployment, wherein engineers with advanced degrees work as delivery boys and PhDs apply for jobs that require only elementary levels of education. India’s growth is driven by government expenditure and the high-tech service sector, which generate a high growth rate but still 28 million educated youth remain unemployed and 100 million women have stopped looking for jobs.
Yes, India is a rising power and the fastest growing major economy, no doubt on track to surpass Japan this year, I should know, I edited an e-book on this subject, but there is a story hidden behind the India Story.