In last year’s Independence Day speech at the Red Fort in Delhi, Narendra Modi made a bold pledge: India would become a developed economy by 2047, when it celebrates 100 years since its founding. The country had three things in its favour, the prime minister declared: “demography, democracy and diversity”.
The vow would have seemed implausible a decade ago. In 2013, the year before Modi took power, India was identified by Morgan Stanley among a group of vulnerable emerging-market economies, dubbed the “Fragile Five” for their reliance on foreign capital to fuel their economies and, in many cases, big current account deficits.
Ten years later, Modi’s India is firmly in the sights of international investors, consultants and trading partners as one of the world’s fastest-growing big economies and a critical “China plus one” destination for companies seeking to reduce their exposure to political currents in Beijing.
In India’s upcoming national election, expected between April and May, Modi will make much of his Bharatiya Janata party’s economic record during its 10 years in government, touting its successes in delivering growth, reducing poverty and building infrastructure including airports, railways and roads.
But what do the numbers show?
The Financial Times has analysed official data for gross domestic product growth, unemployment and poverty reduction, as well as indicators tracking job creation and employment, examining how they have performed in absolute terms and comparatively against other countries in some cases.
India’s statistics are in many cases deficient — the country has not held a census since 2011, for example — or in dispute, as in the case of unemployment data, but the numbers point to some clear trends.
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During Modi’s two terms in office, India has on average been one of the fastest-growing large economies. Between 2014 and 2022, GDP grew at an average of 5.6 per cent in compound annual growth rate terms. An average of 14 other large developing economies had a CAGR of 3.8 per cent over the same period.
But India’s growth rate was even higher from 2000 to 2010, at more than 6 per cent on average. Economists said India’s economy would need to grow faster than its current 6-7 per cent rate in order to absorb a growing number of entrants into the workforce and meet Modi’s goal of reaching developed country status by 2047.
India is the poorest among the Brics nations, said Raghuram Rajan, professor of finance at the University of Chicago Booth School of Business and a former Reserve Bank of India governor, referring to the grouping that also includes Brazil, Russia, China and South Africa. It also “has a much longer distance of travel before it reaches their level of per capita income”, he said. “Growth has been good, but it has to be set in perspective.”
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Extreme poverty has continued to fall since Modi took power. The share of India’s population living in extreme poverty has fallen from 18.7 per cent in 2015 to 12 per cent in 2021, according to World Bank data. Urban and rural regions both registered a drop in the share of people living below the international poverty line of $2.15 a day.
These gains are partly thanks to generous social transfers to the poorest under Modi’s government. In November, India extended one of the biggest such schemes, launched during the Covid-19 pandemic, under which more than 813mn people, or more than half of the population, benefit from free food grains for another five years.
“The emphasis of this government has been on efficient delivery of a lot of welfare schemes,” said Krishnamurthy Subramanian, executive director at the IMF and a former chief economic adviser to the Modi government.
Its use of technology, including the creation of more than 500mn bank accounts for the poor, linked with biometric identification via India’s digital ID system Aadhaar, has “helped direct welfare transfers precisely to the beneficiaries and eliminate pilferage to middlemen”, he added.
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Rapid economic growth has opened the door to the middle class for tens — by some measures hundreds — of millions of Indians over the past decade.
According to data from household surveys conducted by People Research on India’s Consumer Economy, an Udaipur-based non-profit think-tank, the middle class — comprising people with annual family income of Rs500,000-Rs3mn ($6,700-$40,000 at 2020-21 prices) — has been among the fastest-growing income groups since Modi took power in 2014.
“The top income segment — the rich — has soared from 30mn to 90mn, while 520mn are middle class currently, up from 300mn in 2014,” said Rajesh Shukla, the think-tank’s managing director and chief executive.
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Since Modi took power, his government has taken steps to improve public health and hygiene, including a nationwide campaign to build public toilets. Infant mortality has also fallen steadily, though the improvement predates Modi’s time in office. As of 2020, India’s infant mortality rate was lower than South Africa’s.
While the Modi government has presided over a period of mostly high growth, the economy has failed to create enough jobs. Unemployment — which has especially hit the country’s youth, the world’s largest population of young people — figured prominently in hard-fought state elections in 2023 and will be a point of attack for Modi’s opponents in this year’s election for the lower house of parliament.
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The jobless rate has barely budged during Modi’s time in office and exceeded 10 per cent in October for the first time since the pandemic, according to the Centre for Monitoring Indian Economy, which produces India’s most-cited unemployment figures. Among young people aged 15-34, the CMIE figures are even worse: unemployment in that group stood at 45.4 per cent in 2023.
Some economists — as well as the Modi government itself — say the CMIE data is inadequate and prefer to cite unemployment figures gathered by India’s statistics ministry in its Periodic Labour Force Survey, which show a decline in jobless rates.
But in a country where millions work in menial or low-quality jobs, other analysts say India’s unemployment numbers cannot be trusted at all. Ashoka Mody, visiting professor of international economic policy at Princeton University and author of the scathing economic history India Is Broken, calls the official unemployment numbers “a meaningless statistic in the Indian context”, arguing that it hides a bigger problem of underemployment.
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Women account for a smaller percentage of the labour force than when Modi took power in 2014. India’s female labour force participation rate fell from 25 per cent in 2014 to 24 per cent in 2022, lower than regional neighbours Bangladesh, Sri Lanka and Pakistan.
Economists have said getting more women into work would boost India’s growth — by up to 1.5 per cent, according to one World Bank estimate — but safety issues and social pressure prevent many from doing so.
“One problem is the availability of jobs, and the availability of jobs where women feel safe outside the home,” said Swati Narayan, associate professor at OP Jindal Global University and author of Unequal, a book about why India lags behind its south Asian neighbours in social and economic development. “In India, there are a lot of taboos about women going outside to work.”
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Spending on roads, railways and other infrastructure has surged under Modi and has been an engine of economic growth. India plans to spend Rs5tn, or 1.7 per cent of GDP, on capital expenditure for building roads and railways, up from 0.4 per cent of GDP in 2014, according to calculations based on the FT’s analysis of Union Budget data.
Data compiled by CMIE also point to a construction boom since Modi took office, with India adding more than 10,000km of roads each year since 2018.
“This is something that this government has done very well — lots of road and rail network construction,” said Rajan at the University of Chicago.
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India has boasted of its success in bringing nearly 1bn people online, promoting its public digital infrastructure as a model for other developing countries.
The Aadhaar system of digital IDs began under Modi’s predecessors in a Congress-led government but has been brought to life during his tenure and parlayed into a full-fledged digital payments ecosystem, dubbed the India Stack.
The drive to bring more Indians online was supported by a proliferation of cheap, mostly made-in-India smartphones, which more than 60 per cent of Indians now carry. According to India’s government, the value of digital transactions has grown 70 per cent over the past five years, from Rs1,962tn in the 2017-18 fiscal year to Rs3,355tn in 2022-23.
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India prides itself on its globally connected information technology sector, with a host of domestic and foreign companies clustered in southern India, especially around Bengaluru and Hyderabad, making the country the “back office of the world”.
But India is falling short on research and development spending. Its share of the economy has dropped under Modi to less than 0.7 per cent of GDP, a lower rate than that of any other Brics country and far below the roughly 5 per cent of GDP spent by some of the world’s biggest R&D centres, led by South Korea and Israel.
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While many economic indicators have improved, democracy watchdog groups have downgraded India’s rankings on basic freedoms over the past 10 years.
The BBC’s India head office and Indian news website NewsClick were raided in 2023, and journalists from other organisations have faced criminal charges or jail time in what watchdog groups describe as a crackdown on free expression.
India’s press freedom ranking according to Reporters Without Borders (RSF) dropped to 161 in 2023, down from 140 in 2014 and only three places higher than Russia, which unlike India cannot credibly claim to be a democracy.
Defenders of the Modi government’s record have questioned the reliability of rankings on human rights and civil liberties compiled by RSF, Freedom House and other groups, while some Indian civil society groups have argued that a free press — including an independent business press — is crucial not just to protecting Indian democracy but its economy, too.
“The reason you move to ‘China plus one’ is because of the undemocratic and opaque power structure in China,” said Yamini Aiyar, chief executive of the Centre for Policy Research think-tank. “If India loses this piece, it will have huge repercussions in the long run.”
