India’s 7.8% June-quarter growth rate was celebrated by the government but met with scepticism from opposition parties and critics. Technical base-year revisions aside, the doubt is fuelled by India’s “high growth” story arguably not mirroring the lived reality for many people in the country.
Two factors drive the disconnect: first, the belief that recording 7-8% growth sporadically is celebration-worthy; and second, gross domestic product (GDP) growth may have decoupled from human welfare as inequality rises and economic expansion becomes more capital-intensive.
The latest available data on real —expected to undergo revisions once back-series data based on the new base year is released later—shows that India recorded 7%-plus growth in 18 of the last 36 years between 1990-91 and 2025-26. The growth rate was above 8% in five years, including one year from the pandemic rebound.
However, the country never sustainably achieved an 8% or even a 7% growth rate. Its growth rate averaged 5.8% in the 1990s, 6.3% in the 2000s, 6.6% in the 2010s, and 5.6% in the 2020s (until FY26). While India consistently recorded 7% plus growth in the post-pandemic years, it has not been enough to offset covid losses and lift average figures upwards.
The government’s own framework talks about Niti Aayog’s estimate of 7-10% growth over the next three decades and the 2024-25 Economic Survey’s indication that an average growth rate of around 8% over a decade or two would be necessary for India to become an advanced economy by 2047, a vision that aims to encompass both economic prosperity and an overall quality of life enjoyed by its citizens. An assessment by the World Bank said it will need a 7.8% real growth rate over the coming decades, but that would not be possible under a “business-as-usual” scenario.
Falling behind
India has been the world’s fastest-growing major economy for some time now. This, however, has not done much to lift per-capita GDP levels meaningfully. Since its population is still growing, economic expansion leads to smaller gains for the average Indian. Per capita GDP growth trails real GDP growth by at least around 1 percentage point. In simpler terms, if the Indian economy grows 7.8%, per capita GDP grows 6.8-6.9%.
These numbers also pale when compared to other countries. India entered its peak demographic window in 2019, the year in which the share of dependents in the working-age population fell below 50%. This population structure is considered most conducive to boosting economic productivity.
To be sure, the covid pandemic is partly responsible for throwing India off its original trajectory. This means that the country needs much sharper growth to deliver results for its young and growing citizens. Compared to India’s 5.4% GDP growth and 4.4% per capita growth, countries such as Japan, South Korea, China, and Vietnam delivered 6.2-9.4% growth in the first decade of their peak demographic window.
Thailand and Brazil have a slower strike rate and are considered to be ‘growing old before growing rich’. Much like India, Thailand also suffered a disruption—one of its own making—in the form of the Asian financial crisis of 1997-98. The crisis began after Thailand unpegged the baht from the US dollar as its foreign currency reserves ran out, derailing its earlier track record of 7.8% growth. According to a Reserve Bank of India 2022 report, India was expected to take nearly a decade to recover from covid losses.
Growth paradox
While the government celebrated the Q1 FY27 growth rate as a sign of the economy’s resilience despite disruptions from the West Asia war, the same quarter saw two major protests, the Noida worker protest and the Jantar Mantar protest, reflecting growing dissatisfaction among students and workers. These two realities can co-exist—high-frequency indicators suggesting strong economic momentum alongside people’s dissatisfaction. This may not be an India-specific problem.
In June, prominent economists, social scientists, and public intellectuals, including former UN special rapporteur on extreme poverty and human rights Olivier De Schutter and Nobel laureate in economics Joseph Stiglitz, wrote that growth was a “doomed strategy”. The authors argued that the idea that economic growth would “lift all boats” has not been kept. “While national incomes expanded, wages stagnated, work became more precarious, and public services were cut. At the top, fortunes ballooned; at the bottom, families turned to food banks. Growth has become decoupled from shared prosperity,” they wrote.
Many of these arguments have been raised in India’s context as well. While headline figures suggest an impressive 7.8% growth rate, the youth unemployment rate remains 9-11%, over 40% of the workforce is still stuck in the low-productivity agriculture sector, while manufacturing barely employs 12%, over 800 million people are still getting free foodgrain from the government, and promises of cash handouts have become an election-winning strategy.
Moreover, growth is not uniform across all Indians. In the past three years, the manufacturing, services, and construction sectors recorded gross value added growth of around 7.8-10%. These collectively employed around 42% of the country’s workers. , which grew barely 3.4%, alone employed more people. The growth feeding into the national headline figure isn’t representative of a large section of the population or their lived reality.
India’s economic growth model also shows signs of rising inequality, with the share of pre-tax national income held by the top 10% of Indians rising significantly, according to data from the World Inequality Database. This is not to say the country hasn’t grown its GDP or improved lives over the decades, but given its current demographic advantage, ‘business as usual’—as the World Bank put it—will not be enough.