Modi’s developed-nation dream strains against India’s growth gap

India likely grew at more than 7 per cent last quarter, a pace most major economies would envy. Yet, that may still be too slow to deliver on Prime Minister Narendra Modi’s dream of a developed nation.

Modi wants India to achieve that status by 2047, the centenary year of its independence from British rule. Getting there would require the world’s sixth-largest economy to grow at 9.25 per cent annually for 21 years, according to Ashok Lahiri, a senior official at the country’s apex government-run think-tank.

The ambition, branded Viksit Bharat — or Developed India— has become a centerpiece of Modi’s third term. However, assuming the current rate of growth, India’s economy would fall short of his vision, according to several economists.

Growth averaged 6.3 per cent between 2000 and 2024, well below the current potential rate of 7.5 per cent-8 per cent. The economy has grown at or above 9.25 per cent just three times over the past 50 years — 1975, 1988 and 2021.

Achieving the target “would require an exceptionally strong and sustained acceleration in growth,” which will “become increasingly difficult as the economy expands and the base becomes larger,” said Alexandra Hermann Prasad, a London-based economist with Oxford Economics.

Data Monday will likely show the economy expanded 7.3 per cent last quarter from a year ago, slowing from 7.8 per cent in the previous three months.

Growth below 8 per cent could leave India vulnerable to the so-called middle-income trap, where rising wages erode a country’s low-cost advantage before productivity and skills improve enough to compete with richer economies.

And the distance to high-income status is stark. India’s per-capita income was $2,813 in 2025 and would need to rise more than sixfold to around $18,000 by 2047 to cross that threshold, according to NITI Aayog’s Lahiri.

There are “significant vulnerabilities,” in India’s economy, said Lavanya Venkateswaran, economist at Oversea-Chinese Banking Corp. She pointed to the country’s current-account and budget gaps as well as reliance on volatile capital inflows to finance its external balance as risks.

That’s partly why the nation’s appeal among foreign investors is waning, with the Indian rupee the worst-performing currency in Asia this year so far. India replaced Indonesia as Asia’s least-preferred stock market in an August survey of fund managers by Bank of America Corp.

One solution is expanding manufacturing, economists say. And, that’s on the Modi government’s agenda too, though the sector has stayed stagnant at around 16 per cent-17 per cent as a share of India’s gross domestic product for more than a decade. That’s compares with Modi’s 25 per cent aim.

Economists say boosting high-tech exports, encouraging more private investment and reducing reliance on imported energy are other ways to accelerate economic momentum.