Prime Minister Narendra Modi vowed to position India as the world’s third-largest economy if elected for a third term. Assembling evidence, he proudly pointed to how our economy jumped from the 10th to fifth spot in the past nine years, perhaps justifying why a third term will ensure a flying leap to the third spot. India is a $3.6 tn economy at constant prices or over $3 tn in current prices, and critics are quick to point out how Modi missed his 2019 promise of reaching $5 tn by 2025. But in the government’s rightful defence, the economy was besieged by a slowdown, recession, pandemic, war and inflation. That’s a lot to take for any nation, and India indeed made a robust recovery. Various projections, including by the IMF, now estimate India’s GDP to cross $5 tn by 2027–28, overtaking Germany (fourth largest) and Japan (third largest). The projections seem like a nailed-on certainty, not because everyone is guessing in the same direction, but for two apparent reasons: India’s steady growth rate and the economic decline of both Germany and Japan.
What will a $5-tn economy, or the world’s third largest, entail? According to SBI Research, at least two states—Maharashtra and Uttar Pradesh—will break into the $500-bn club. That is larger than the economies of Vietnam and Norway. But given India’s 30-odd states, we must aim for broad-based growth lifting all boats in its swell, sparking job creation and income growth. As per official data, though the headline unemployment rate isn’t alarming, urban unemployment remains high, along with a worrying decline in full-time jobs. Of the estimated 150 mn urban workforce, only 73 mn have full-time jobs. Moreover, the youth unemployment rate is steep at about 23% and needs immediate attention as the 15–24 age bracket comprises a significant concentration of the total population.
Although official data shows that India’s per capita income has doubled in the last nine years from Rs 86,647 to Rs 1.7 lakh, there’s an unequal distribution of wealth. Median wages are lower in real terms, and there’s a widening gap between the rich and poor, especially following the Covid-19 pandemic that has pushed millions back into poverty. We need employment-rich economic growth that supports the ambitions of the working class, not just the capitalist and business class.