Context

• Civilisations are often tested by moments of crisis, and India has long embraced the philosophy that trial precedes triumph.
• Much like the mythological churning of the ocean, Samudra Manthan, where turbulence yielded nectar, India’s economic churns have consistently produced renewal.
• From the 1991 liberalisation born of crisis to the digital surge triggered by the COVID-19 pandemic, adversity has catalysed resilience.
• Today, against the backdrop of sceptics branding India a dead economy, the data tells a very different story, one of rapid growth, strengthened buffers, and inclusive opportunity.

Features of India’s Economic Growth

• A Resilient Growth Story
  • The latest GDP numbers reveal an economy on firm footing. Real GDP surged by 7.8% in Q1 FY 2025-26, the strongest in five quarters, with growth spread broadly across sectors: manufacturing at 7.7%, construction at 7.6%, and services at an impressive 9.3%.
  • Nominal GDP rose by 8.8%, driven by consumption, investment, and reforms in logistics that reduce costs and improve efficiency.
  • India has now emerged as the world’s fourth-largest economy and remains the fastest-growing major one, surpassing even the United States and China in growth rates.
  • On its current trajectory, India is poised to overtake Germany before the decade ends, claiming the position of the world’s third-largest economy in market exchange terms.
  • Recognition has followed. S&P Global’s recent upgrade of India’s sovereign rating, the first in 18 years, underscores fiscal discipline, monetary credibility, and sustained growth.
  • The upgrade not only lowers borrowing costs but also directly rebuts narratives of stagnation.
• Growth With Inclusion
  • Between 2013-14 and 2022-23, nearly 25 crore Indians moved out of multidimensional poverty.
  • This transformation rests on wide-scale delivery of essential services: universal bank accounts, clean cooking fuel, health coverage, tap water, and direct benefit transfers.
  • Together, these interventions empower households to make independent economic choices.
  • Unlike authoritarian sprints, India’s democratic model emphasises consensus-building, competitive federalism, and reliable last-mile delivery through its digital public infrastructure.
  • It is a marathoner’s economy, steady, enduring, and designed to last.

Crucial Factors Deriving India’s Economic Growth

• Energy Security as Growth Enabler
  • As the third-largest energy consumer and the fourth-largest refiner and LNG importer, India has built substantial refining capacity of 5.2 million barrels per day, with plans to expand further by decade’s end.
  • With energy demand expected to double by 2047, India’s role will be pivotal to global energy stability, accounting for nearly a quarter of incremental global demand.
  • Government reforms have expanded exploration acreage, unlocked previously restricted basins, and introduced transparent bidding through the Open Acreage Licensing Policy.
  • Pricing reforms, particularly for natural gas, have further encouraged investment, while measures such as premium incentives for deepwater projects highlight the balance between security and innovation.
• Transitioning to a Green Future
  • Ethanol blending has risen from 1.5% in 2014 to 20% today, generating massive foreign exchange savings while directly benefiting farmers.
  • The rollout of compressed biogas plants, a blending mandate, and investments in green hydrogen showcase India’s ambition to lead in the clean energy transition.
  • Criticism of India’s purchase of Russian crude overlooks both legality and necessity. Russian oil, unlike Iranian or Venezuelan crude, is not under outright sanctions but governed by a price cap regime intended to ensure global supply.
  • India has complied with these rules, stabilising global oil markets and preventing shocks that could have driven prices above $200 per barrel.
  • Far from profiteering, India’s long-standing refining and export practices have kept supply chains stable, even serving European markets.
  • Domestically, subsidies, tax cuts, and mandatory supply quotas shielded Indian consumers from price volatility, reflecting the state’s responsibility to its citizens.

Industrial and Digital Transformation

• With strong support through production-linked incentives and logistics upgrades under the Pradhan Mantri Gati Shakti initiative, sectors like semiconductors, defence, electronics, and renewable energy are scaling rapidly.
• The recent approval of four new semiconductor projects under the India Semiconductor Mission, combined with Japan’s renewed investment commitments, signals intent to create resilient technology supply chains.
• The digital economy multiplies these gains. With world-leading digital payment systems such as UPI and a thriving startup ecosystem, India is exporting not just goods but solutions.
• The fusion of digital rails with physical infrastructure creates compounding effects: lower friction, higher productivity, greater formalisation, and sustained cycles of investment and consumption.

Conclusion

• Independent forecasts predict that by 2038, India could emerge as the world’s second-largest economy in purchasing power parity terms, with a GDP surpassing $34 trillion.
• Achieving this trajectory requires sustained reforms, strong human capital, and abundant, clean energy for all.
• History shows that India’s moments of doubt have always been followed by breakthroughs, the Green Revolution, the IT revolution, and the digital revolution.