India’s Economy Dead?
Source: Money Control
GS III: Indian Economy
Overview
- News in Brief
- Is India’s Economy Dead
- Where India lags?
Why in the News?
Trump says India’s economy, the fastest growing in the world, is ‘dead’.
News in Brief
- United States President Donald Trump announced 25% tariffs on India, as well as an unspecified “penalty” for buying military equipment and energy from Russia.
- Union Minister of Commerce & Industry Piyush Goyal pushed back, saying that India had rapidly transformed from being one of the ‘fragile five’ to the fastest-growing major economy in the world in just over a decade.
- Last decade, the government has taken transformative measures to promote India as the manufacturing hub of the world.
- India’s young, skilled and talented workforce is driving innovation and competitiveness of Indian industry.
Is India’s Economy Dead
- Simply put India’s Economy is not dead
- The data throw up a picture that is obviously contrary to Trump’s contention that India, or even Russia, is are “dead” economy.
- According to IMF India’s economy is today almost 12 times its size in 1995.
- Only three economies that have grown in size relative to the US: China, India, and Russia.
- India was less than 5% the size of the US economy in 1995, but in 2025 it is almost 14%.
What about other nations?
- US has now become four times its 1995 size, its closest trade partners like the United Kingdom have grown by less than 3 times, and Germany has failed to even double its economy.
- Japan’s GDP in 2025 is lower than what it was in 1995, which would, by this metric, qualify it to be not just a “dead” but perhaps a decaying economy.
- India also has not achieved the pace of growth that China did during its own journey.
Where India lags?
- There are many sectors that India wants to protect when it comes to international trade.
- India’s farm economy is plagued with distress, with the bulk of the farmers living at subsistence levels.
- Official data show that since 2019-20, manufacturing has registered a slower growth rate (CAGR of 4.04%) than even agriculture and allied activities (4.72%).
- Quality of growth and its distribution is acutely skewed, leading to widening inequalities and persistently high poverty.
- Human development metrics such as health and education, the situation is concerning.
- Unemployment in India rises to very high levels with rising educational attainment.
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