Ruling politicians in New Delhi continue to hype their country's economic growth even as the Indian currency hits new lows against the US dollar, corporate profits fall, electrical power demand slows, domestic savings and investment rates decline and foreign capital flees Indian markets. The International Monetary Fund (IMF) has questioned India's GDP and independent economists Professors Arun Kumar and Ashoka Modi and investment banker Ruchir Sharma have detailed why the Indian official data can not be trusted. It seems that the BJP-led government of Prime Minister Narendra Modi is fast losing credibility by politicizing the civilian bureaucracy and the military brass to project their economic and military failures as successes.
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| IMF Gives C Grade to India's GDP Data |
Beyond the disputed claim of being the "fourth largest economy", the Modi government's failure on the national health and wellness front is also getting more attention. “Air is unbreathable. Water is undrinkable. Food is adulterated. What’s the point of becoming the 4th largest economy?” asked India-American technology entrepreneur Sabeer Bhatia in an X message recently. Gita Gopnath, Harvard professor of economics, said at the World Economic Forum in Davos this week that the economic impact of pollution on India is more severe than the effects of tariffs imposed on the country. “About 1.7 million lives are lost every year in India because of pollution. That’s 18% of the total deaths in India,” Gopinath said, quoting a World Bank study. “Even from an international investor’s perspective … the pollution holds you back.”
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| Unsafe Drinking Water in India Claimed as 4th Largest Economy. Source: DownToEarth |
An international badminton tournament in India has brought global spotlight on the lack of basic hygiene in India. Foreign players complained about dusty floors, dirty courts, bird droppings and unhygienic conditions at the India Open in New Delhi. “I think the floors are dirty. There is a lot of dirt on the courts. There’s bird excrement. There are birds flying around in the arena,” said 28 year-old Denmark women’s singles player Mia Blichfeldt. Andres Antonson, world number three badminton player, withdrew from the India Open Super 750 in New Delhi for the third consecutive year, choosing to pay a $5,000 fine. He cited "extreme" hazardous air pollution in Delhi as the reason for skipping the mandatory tournament, arguing it is not a safe place to hold the event.
The IMF has recently expressed doubts about Prime Minister Narendra Modi's BJP government's GDP data. It has particularly questioned the government's statistical methodologies, inflation measurement, and the estimates of the informal economy used in reporting the country's gross domestic product. Professor Arun Kumar of Jawaharlal Nehru University believes the IMF's concerns are valid. He thinks the real size of India's economy is only half of what is officially claimed. “The economy is almost 50% wrong – when the government says it’s $3.8 trillion, my estimate is it is probably still $2.5 trillion because we are overestimating the unorganized sector, which is actually declining. This is building up over a period of time,” Kumar told Indian journalist Karan Thapar.
In its recent assessment, the International Monetary Fund (IMF) has given a "C" grade to India's national accounts. In particular, the IMF has raised the issue of the government using 2011-12 as the base year as being outdated, the discrepancy between production and consumption data and the use of Wholesale Price Index, and not a Producer Price Index, to deflate many economic activities to derive real GDP from nominal GDP.
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| Indian Firms Falling Corporate Profits. Source: Bloomberg |
Corporate profits of Indian firms are growing at a much slower pace than the 8.2% GDP growth in its most recent quarter. Net income for Nifty 50 Index firms likely rose 1.1% in the three months through Dec. 31 from a year earlier, according to analyst estimates compiled by Bloomberg. That would be the slowest pace in five quarters, weighed down by deteriorating margins for banks. Falling profits and declining currency are causing foreign capital to flee Indian markets. Foreign Portfolio Investors (FPIs) pulled out over $20 billion from Indian equities in 2025, marking a severe, sustained withdrawal that has continued into 2026. Net Foreign Direct Investment (FDI) has seen consecutive monthly outflows, including $1.67 billion in October and $446 million in November 2025. Investment banker Ruchir Sharma wrote about it in a Financial Times op ed titled "India needs to import more capital and export fewer workers". Ruchir wrote: "Most strikingly, corporate revenue normally grows (or shrinks) with the economy — in any country. But last year corporate revenue growth for listed companies in India decelerated to barely half the GDP growth rate"
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| Falling Indian Rupee. Source: Reuters |
The source of the biggest error is the way India estimates the informal economy which, including agriculture, accounts for almost 45% of GDP. To do so, India uses the formal sector as a proxy to estimate the performance of the informal sector. But if the two sectors are moving in opposite directions, as has happened after demonetization, GST imposition and the pandemic, you could end up overestimating the unorganized sector.
Indian-American economist Ashoka Mody, author of "India is Broken", has argued that the current unemployment crisis in India is a direct result of the destruction of the informal sector, particularly the mom and pop stores that employed a large number of Indians.
Questions about the veracity of India's official GDP figures are not new. These have been raised by many top economists. For example, French economist Thomas Piketty argues in his best seller "Capital in the Twenty-First Century that the GDP growth rates of India and China are exaggerated. Picketty writes as follows:
"Note, too, that the very high official growth figures for developing countries (especially India and China) over the past few decades are based almost exclusively on production statistics. If one tries to measure income growth by using household survey data, it is often quite difficult to identify the reported rates of macroeconomic growth: Indian and Chinese incomes are certainly increasing rapidly, but not as rapidly as one would infer from official growth statistics. This paradox-sometimes referred to as the "black hole" of growth-is obviously problematic. It may be due to the overestimation of the growth of output (there are many bureaucratic incentives for doing so), or perhaps the underestimation of income growth (households have their own flaws)), or most likely both. In particular, the missing income may be explained by the possibility that a disproportionate share of the growth in output has gone to the most highly remunerated individuals, whose incomes are not always captured in the tax data." "In the case of India, it is possible to estimate (using tax return data) that the increase in the upper centile's share of national income explains between one-quarter and one-third of the "black hole" of growth between 1990 and 2000. "
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28 comments:
For a Pakistani you seem so much fixated on the state of Indian economy than Pakistan's. Nearly everything you have written in this article other than the badminton tournament and Gita Gopinath's comment at Davos have already been covered by you in your recent writeups. And its no secret that Modi & Co likes to manufacture hype about the economy's performance under him due to domestic political compulsions. They need to sustain the narrative of "fake" GDP numbers and economic development (however hollow it may actually be in reality) through mainstream and social media outlets inorder to win elections here. It makes perfect political sense for them and its nothing new. (And of course, it should be obvious that all of this hype is primarily meant for a domestic audience, as one cannot expect the outside world to be fooled by these.)
Since all of this is well known and have been amply covered in your writeups, why don't you write an article about the broader state of Pakistan's economy, society or environment? Since you like to compare Pakistan and India so much, how well do you think is Pakistan's economy or its industry doing in comparison to India's?
As an example, I have written in some previous comments about how India's automobile manufacturing industry have been making rapid strides in recent years. As an illustration of this growth, two of the top three motorcycle manufacturing companies (by volume) in the world are now Indian - Hero and TVS - and the motorcycles and cars manufactured here are increasingly being exported to a large number of countries in the Global South as well as some developed Western markets. Though these India-manufactured cars and motorcycles are mostly cheaper or commuter-ish models and not premium ones, it is notable that this is the kind of development trajectory that the Chinese auto industry traced a decade ago as well.
https://youtu.be/4EECSxEPsNo?si=2igexptKWmSc9g99
Of course, I wouldn't claim the growth of India's auto industry is a reflection of the broader state of its economy (which do face considerable challenges in various sectors) nor does it make sense to compare the economy of a country of 1.4 billion with a neighbour or rival that is only 250 million, but I would like to see an article here about the state of Pakistan's industrial economy and its exports. That would be a refreshing change.
Riaz:
I feel exactly the same way whenever I visited India in the past seven years.
I’ve observed, incompetence, laziness, lack of professionalism, lack of quality, and even visually pleasing work for any government related projects.
The equipment they use is archaic and often times manual labor, which ensures that the project will take many extra years to complete.
There just seems to be very little attention to detail and any emphasis on quality.
The airports are an exception – definitely top-notch. Everything else is sub-par. In certain parts of Bangalore, the streams are so polluted. You can actually see white chemicals in almost bubbling at the surface. There are thousands of people who live in recently constructed apartments along the streams. It’s really sad that these innocent people’s health is at such high risk.
In Hyderabad, there’s a famous dam where I went for a morning walk and had to rush back to my hotel, and use the treadmill instead because of the strong smell of chemicals along the dam.
I also cannot see how this is the fourth large economy in the world and how Modi can brag to the degree that he does.
@Ismail,
- "I also cannot see how this is the fourth large economy in the world and how Modi can brag to the degree that he does."
There is zero correlation between the size of economy of a country and how "liveable" it actually is. The size of a country's economy is in proportion to its population and industries. And industries typically produce a lot of pollutants in the form of smoke and other effluents. And unless there is good urban planning and waste treatment facilities densely populated cities will turn out unlivable. This was pretty much the case of China as well when it was developing rapidly. We know how Beijing and other Chinese cities used to grab headlines as the most polluted in the world a few years ago, until the government shut down or moved out polluting industries from their vicinity and actively encouraged electrification and green energy. India needs to do something similar to make its cities liveable again.
Vineeth: “This was pretty much the case of China as well when it was developing rapidly”
Acknowledging your problems is the first step toward solving them.
This is the biggest difference between Chinese and Indian leaders.
The Chinese leaders acknowledged their problems and did not brag like Modi and his Hindutva followers do.
Deng Xiaoping's famous "hide and bide" maxim advised China to "Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership" to build strength quietly after its period of weakness. It was a strategy for foreign policy and development, urging patience and avoiding drawing attention until China was strong enough, a policy that guided China for decades but is now debated as China's power has grown.
@Riaz sb,
- "The Chinese leaders acknowledged their problems and did not brag like Modi and his Hindutva followers do."
What you say is the very nature of Modi and his style of politics. They never publicly acknowledge any failures or setbacks, even if they make an attempt to fix them behind the scenes. An example here is how the Modi govt would want to pretend that Trump's tariffs have had negligible impact on India's exports or how Operation Sindoor was a resounding success for Indian military, but they are compelled to work overtime behind the scenes to fix the exposed weaknesses and gaps by signing trade deals with other countries and embarking on a long overdue military modernization. Unfortunately, the fixing of India's environmental degradation or pollution seems to be low priority for him atleast for now.
As for the famous maxim attributed to Deng Xiaoping (or maybe coined by Jiang Zemin later), that works well in authoritarian systems where rulers don't have to advertise their "achievements" in front of voters to win elections. Such a strategy wouldn't work for populists like Modi (or even Trump, for that matter). They need to tell the voters they are "winners", that the country is doing great under their leadership and that the world is looking up to them etc etc.
Vineeth: “ As for the famous maxim attributed to Deng Xiaoping (or maybe coined by Jiang Zemin later), that works well in authoritarian systems where rulers don't have to advertise their "achievements" in front of voters to win elections. Such a strategy wouldn't work for populists like Modi (or even Trump, for that matter). They need to tell the voters they are "winners", that the country is doing great under their leadership and that the world is looking up to them etc etc”
Late Manmohan Singh, the architect of India’s economic reforms who remained PM for 10 years from 2004-2014, frequently talked about serious problems in India such as poverty, Maoist insurgency and discrimination against Muslims and Dalits. He even compared caste discrimination with Apartheid.
@Riaz Sb,
Unlike Modi, Manmohan Singh wasn't a politician. He was an economist and more like a technocrat. He didn't contest or win popular elections. To be appointed as PM, he was elected to Rajya Sabha (upper house of Indian Parliament) by one of the state assemblies. So he could speak more objectively and without political compulsions. The politics of the Congress party was also more centrist or left-liberal and not right-wing nationalist. So their leaderships were generally more open about acknowledging the country's challenges. Even Indira Gandhi who was known for her strong authoritarian tendencies could confidently face 'uncomfortable' questions from western press with grace.
Another important factor to consider here is the role that social media plays in political propaganda. MMS was PM at a time when social media had limited role in spreading political narratives. Modi on the other hand weaponized social media by spreading exaggerations, half-truths and outright falsehoods. That's how his political machinery continues to run even now. So any open acknowledgement of a failure, setback or challenge is a strict no-no for him and his government.
Vineeth Saar,
There is a good reason why Brofessor sb doesn't write about the Paki economy. Because there is nothing worth writing about.
but I would like to see an article here about the state of Pakistan's industrial economy and its exports. That would be a refreshing change.
That won't be a refreshing change- that would be a depressing change.
I will revert on the claims of IND being a mere USD 2.5 trillion economy later.
Regards
Independent voices like yours are much needed for truth to come out. GDP is fake but pollution is real. Income is fake but Europe making trade deal is real. Growth is fake but RBI reserves are real.
Vineeth,
"...you seem so much fixated on the state of Indian economy than Pakistan's...."".
Just wondering if you have ever bothered to look in the mirror?
G. Ali
@G Ali,
- "Just wondering if you have ever bothered to look in the mirror?"
Of course, I do. Do you?
What I have stated is a stark fact. As someone else wrote above, is it that there is very little to write about Pakistan's economy or its industry these days (other than occasional news about some obscure AI startups)? Is there nothing happening in its manufacturing sector? I'd like to read about it in this blog.
All true, except that this article is from 2023. They are finally starting the census activities this year after long delay.
https://www.google.com/amp/s/indianexpress.com/article/explained/coming-this-year-houselisting-census-and-the-questions-you-will-be-asked-on-internet-use-cooking-fuel-10491505/lite/
https://www.economist.com/the-world-ahead/2025/11/12/indias-census-will-be-consequential-and-controversial
Indian Prime Minister Narendra Modi will seek to bolster fast economic growth and buffer the Asian nation from external shocks through domestic policy reforms in the latest budget on Sunday, as unprecedented global volatility weighs on the outlook.
https://www.deccanherald.com/business/union-budget/pm-modi-faces-tough-task-to-bolster-growth-in-2026-27-budget-3875986
Sitharaman, economists said, faces the difficult task of restoring short- and long-term investor confidence, as uncertainty over New Delhi's trade talks with Washington has unsettled financial markets and sent the rupee to a record low.
Foreign investors have continued to sell Indian shares after a record outflow in 2025 on stretched valuations, subdued earnings and geopolitical concerns.
With limited capacity to boost spending, the government is likely to focus on simplifying regulations and pushing structural reforms to attract domestic and foreign investment, said Anubhuti Sahay, head of Indian Economic Research at Standard Chartered.
Vineeth, "...Of course, I do...".
No you don't.
"...there is very little to write about Pakistan's economy..."
So how many Pakistani business related newspapers and magazines do you read?
G. Ali
CNBC Daily Open: The EU-India trade deal story is not over yet
https://www.cnbc.com/2026/01/28/cnbc-daily-open-the-eu-india-trade-deal-story-is-not-over-yet.html
On Tuesday, India and the European Union announced a “landmark” free trade deal that would remove or reduce tariffs on more than 90% of goods traded between them.
The deal, nearly two decades in the making, will see India lower tariffs in two of its most politically sensitive sectors, agriculture and autos. It also lands amid a growing wave of bilateral trade agreements, as countries recalibrate supply chains and commercial ties in response to Washington’s increasingly muscular use of tariffs.
That broader shift is already visible. Earlier this month, Canadian Prime Minister Mark Carney visited China, the first leader in his role to do so in 17 years, in a bid to expand economic partnerships with the world’s second-largest economy. UK Prime Minister Keir Starmer is set to follow with a three-day trip to China, the first by a British prime minister since 2018.
Still, the India-EU pact, memorably dubbed the “mother of all deals” by European Commission President Ursula von der Leyen, has yet to clear its most unpredictable hurdle: U.S. President Donald Trump.
Trump, who has slapped punitive tariffs on friends and foes alike, has yet to weigh in on the India-EU agreement. His silence is notable.
In August last year, the U.S. imposed higher levies on Indian goods over India’s oil purchases from Russia, days after imposing a 25% duty on New Delhi.
With Trump’s recent escalating rhetoric toward the EU, including threats tied to Greenland, his response looms as a persistent cloud over the “historic” deal. And that cloud darkened further when U.S. Treasury Secretary Scott Bessent criticized the EU for forging a trade agreement with India in an interview with ABC News on Sunday.
But perhaps it’s not all doom and gloom, as the U.S. and India are at “a very advanced stage” of finalizing a highly-anticipated deal, India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri told CNBC Tuesday.
Another cloud weighing on investors’ minds is the U.S. Federal Reserve, which concludes its policy meeting Wednesday. Rates are widely expected to remain unchanged, but Chair Jerome Powell’s remarks will be closely parsed amid renewed political pressure on the central bank.
‘Europe is financing the war against itself’: India-EU FTA, ‘the mother of all trade deals’, draws US ire – India-EU Trade Council
https://eu-india.org/2026/01/27/europe-is-financing-the-war-against-itself-india-eu-fta-the-mother-of-all-trade-deals-draws-us-ire/
US Treasury Secretary Scott Bessent has attacked the India-EU free trade deal expected to be announced on Tuesday, accusing Europe of indirectly financing the war between Russia and Ukraine through energy trade through India. The agreement has been called the “mother of all agreements” by Indian and European leaders. President Trump’s top aide said European governments are compromising their own security by buying refined oil products from Russian crude from India, while Washington continues to impose punitive tariffs on New Delhi for the same reason.
US denounces India-EU free trade deal, says Europe funds Ukraine war as India faces tariff pressure
Speaking to ABC News, Bessent defended the Trump administration’s decision to impose high tariffs on Indian goods, directly linking them to India’s energy trade with Moscow.“We imposed 25 percent tariffs on India on the purchase of Russian oil. Guess what happened last week? The Europeans signed a trade deal with India,” he said.Bessent added: “And just to be clear again, Russian oil comes into India, the refined products come out and the Europeans buy the refined products. They are financing the war against themselves.”Also read: India, EU finalize FTA, deal expected to be announced today The remarks come as Indian and European leaders prepare to formally announce the conclusion of negotiations on a comprehensive free trade agreement at a high-level summit on Tuesday, marking the end of talks that lasted 18 years. The announcement comes as European Commission President Ursula von der Leyen and European Council President António Costa are on a state visit to India and were also the chief guests at the country’s 77th Republic Day celebrations.Bessent framed the problem as an imbalance in burden-sharing between the United States and its allies, arguing that even as Washington has pushed for energy decoupling from Moscow and imposed tariffs, Europe continues to benefit from what he described as loopholes in the global oil trade. He said President Trump had borne a disproportionate economic and political cost in working to negotiate a settlement to the Russian-Ukrainian conflict, adding that under Trump’s leadership, “we will eventually end the war.”Earlier in Davos, at the World Economic Forum, Bessent made a similar argument, calling Europe’s purchase of refined products from India an “act of stupidity”.
@G Ali,
- "No you don't."
Okay, I take it as another of those 'personal opinions' that is asserted as the absolute, gospel truth without any explanation or justification and which needs to be accepted as is without question. Right.
- "So how many Pakistani business related newspapers and magazines do you read?"
If all I wanted was to read objective news about Pakistan and its business and industry I would be reading Pakistani media outlets (through VPN these days). But that's obviously not what I meant here. I was clearly referring to the stark bias evident in the contents and coverage of certain topics on this blog - why with a stated agenda to cover "South Asia" (which notably isn't just India and Pakistan), the blog goes to great lengths to repeatedly highlight and dissect problems of Indian society, politics and economy (often regurgitating contents from previous writeups as it did here) all the while remaining largely mum on those very same subjects relating to Pakistan.
Is it that Pakistan isn't in "South Asia" anymore? Or is it that Pakistan is doing so great these days after its 24th IMF bailout and the 27th constitutional amendment that there is hardly anything left to write about it other than AI startups, weight-loss drugs, stock market and urbanization? C'mon.. :)
Ajay Kamath
@ajay43
The INR has fallen 6% against the Pakistani rupee over the past few weeks. It has literally collapsed against the Euro. Not one policy maker has an explanation, not one media outlet is asking questions, and
@iam_juhi
and
@SrBachchan
aren’t making jokes
https://x.com/ajay43/status/2016795856419357022?s=20
-----------
sahil bhadviya
@sahilbhadviya
INR is not just falling against USD. It is falling against all major currencies. A euro trip is now 20% more expensive in last 1 yr. UK trip is 12%-14% expensive.. this is crazy. I fail to understand what is happening.
https://x.com/sahilbhadviya/status/2016772489519779916?s=20
--------------
Pakistan becomes latest Asian country to introduce checks for deadly Nipah virus | Reuters
https://www.reuters.com/business/healthcare-pharmaceuticals/pakistan-becomes-latest-asian-country-introduce-checks-deadly-nipah-virus-2026-01-29/
Summary
India confirmed two infections in late December
India says no outbreak, no need for screening at its airports
A number of Asian nations have tightened screening
Nipah has high mortality rate but not easily transmitted
LAHORE/HANOI/HYDERABAD, Jan 29 (Reuters) - Authorities in Pakistan have ordered enhanced screening of people entering the country for signs of infections of the deadly Nipah virus after India confirmed two cases, adding to the number of Asian countries stepping up controls.
Thailand, Singapore, Hong Kong, Malaysia, Indonesia and Vietnam have also tightened screening at airports. But an Indian official said there were no plans to introduce screening at the country's airports and said there was no sign of any outbreak.
The Nipah virus can cause fever and brain inflammation and has a high mortality rate. There is also no vaccine. But transmission from person to person is not easy and typically requires prolonged contact with an infected individual.
PAKISTAN SEEKS TRANSIT HISTORY
"It has become imperative to strengthen preventative and surveillance measures at Pakistan's borders," the Border Health Services department said in a statement.
"All travelers shall undergo thermal screening and clinical assessment at the Point of Entry," which includes seaports, land borders and airports, the department added.
The agency said travellers would need to provide transit history for the preceding 21-day period to check whether they had been through "Nipah-affected or high-risk regions".
There are no direct flights between Pakistan and India and travel between them is extremely limited, particularly since their worst fighting in decades erupted last May.
In Hanoi, the Vietnamese capital's health department on Wednesday also ordered the screening of incoming passengers at Noi Bai airport, particularly those arriving from India and the eastern state of West Bengal, where the two health workers were confirmed to have the virus in late December.
Passengers will be checked with body temperature scanners.
"This allows for timely isolation, epidemiological investigation," the department said in a statement.
That follows measures by authorities in Ho Chi Minh City, Vietnam's largest city, who said they had tightened health controls at international border crossings.
NO OUTBREAK, NO WORRY, SAYS INDIA
India's health ministry said this week that authorities have identified and traced 196 contacts linked to the two cases with none showing symptoms and all testing negative for the virus.
The two infected people are health workers, with the male patient doing well and likely to be discharged from hospital soon, while the female patient remains critical and under treatment, the chief district medical officer in the eastern Indian state of West Bengal told Reuters on Thursday.
Indian health authorities have repeatedly sought to reassure people that the infection has been contained and that there is no reason to fear an outbreak. Federal health authorities also said there was no need to screen passengers at Indian airports.
Vineeth,
"Okay, I take it as another of those 'personal opinions'".
Not really, as they say if it walks like a duck...
You didn't answer my question, how many Pakistani business news papers or magazines do you read?
Please avoid useless essays, I neither have time nor inclination to read them.
G. Ali
The fast-growth mirage of Modinomic
https://asiatimes.com/2026/01/the-fast-growth-mirage-of-modinomics/
World Bank and IMF laud India’s rising GDP but Modi’s economic policies have in reality widely missed their mark
By BHIM BHURTEL
Bhim Bhurtel
@BhimBhurtel
II Faculty of Development Economics and Global Political Economy II Freelance Columnist II
Kathmandu
In the hushed corridors of the World Bank and International Monetary Fund (IMF), a comforting refrain echoes: India, they insist, is the world’s unstoppable economic engine.
Their quarterly reports and growth projections paint a picture of relentless momentum, a beacon of hope in a fragile global economy. It is a narrative eagerly amplified by Prime Minister Narendra Modi’s government, a central plank of its “Modinomics” branding.
But when you travel beyond the glass facades of Mumbai’s corporate towers and Delhi’s corridors of power, a different India emerges — one of endless queues for subsidized rations, university graduates hawking SIM cards on sweltering street corners and a profound, simmering anxiety.
Here, the much-touted boom is not just leaving people behind—it is a statistical illusion masking deep, structural rot.
A closer inspection of India’s economy reveals not a powerhouse but a patient in critical condition. The so-called vital signs, such as GDP (gross domestic product, meaning the total value of goods and services produced in a country), are being artificially sustained while the underlying organs fail.
Three crucial and often overlooked indicators tell the real story: a shockingly narrow tax base (referring to the small proportion of the population that actually pays significant taxes), an exclusive capital market (where access to equity investment is limited rather than spread broadly) and a persistent exodus of the rich (sometimes referred to as capital flight, where wealthy individuals and their assets leave the country).
Together, they expose an economy marked by dangerous levels of inequality and limited readiness for the dual challenges of US protectionism and technological change.
The fast-growth mirage of Modinomic
https://asiatimes.com/2026/01/the-fast-growth-mirage-of-modinomics/
Not so shiny India
The foundational myth of “Shining India 2.0” is that of broad-based prosperity. The reality, laid bare in the nation’s own tax data, is an economy of breathtaking concentration.
For the 2024-25 fiscal year, the Indian government proudly notes that it has issued approximately 800 million Permanent Account Numbers, or PANs, a key identifier for financial transactions such as opening bank accounts, filing income tax returns and making high-value purchases.
This is hailed as a triumph of formalization, the process of integrating economic activities into transparent, regulated systems. The reality lies in the payments. Of those PAN holders, only about 30-35 million individuals — a meager 2% to 3% of the total population —constitute the entire cohort of meaningful income taxpayers, meaning those who actually pay income tax based on their earnings.
Over 90 million other returns filed result in zero tax liability, where individuals file returns but owe no tax. Wealth concentration is even more stark. By February 2025, only 468,000 people reported annual incomes exceeding 1 crore rupees, or about US$120,000, and only 10,184 reported incomes of about $688,130, a level considered extremely high by Indian standards.
This is not an economy; it is a feudal estate with a digital gloss. The celebrated GDP growth rate, often near 7%, is driven almost entirely by the consumption and investment of this microscopic elite and the sectors that serve them: high-end services, luxury goods and speculative finance. It is a closed-loop circuit of prosperity.
Meanwhile, the Indian agriculture sector remains perennially in distress, manufacturing looks anaemic, the economy is unable to absorb the millions of young Indians entering the workforce and real wage growth for most Indians is stagnant.
This is the devastating failure of Modinomics. Policies, ranging from generous corporate tax cuts to the relentless favoring of a handful of cronies have turbocharged wealth at the top while systematically eroding the earning capacity of the middle class and bottom 40%.
The result is a dystopian paradox: a nation the IMF calls the world’s “fastest-growing” economy, where nearly 800 million people, or more than half the population, rely on government-provided free food grains to avoid hunger.
The World Bank’s claim that this growth is “domestic consumption-led” is, therefore, an act of statistical manipulation. What consumption? The exits of automotive giants like Ford, General Motors and Harley-Davidson years ago were early canaries in India’s coal mine; they saw an Indian subcontinent with too few customers who could actually afford their high-value manufactured goods.
The fast-growth mirage of Modinomic
https://asiatimes.com/2026/01/the-fast-growth-mirage-of-modinomics/
Shares for the few
The second act of this theatrical growth is the supposed democratization of capital. The Modi government points to the stratospheric rise of the Sensex and the explosion in demat (securities) accounts as evidence that ordinary Indians are becoming stakeholders in the nation’s rise.
The facade cracks, however, under the slightest scrutiny. While demat accounts—required to hold and trade securities electronically—surpassed 210 million by the end of 2025, regulator studies and market analyses suggest one-third are duplicates or dormant. The number of unique investors, meaning individuals with only one active trading account, is closer to 136 million, and of these, only a fraction are consistently active.
According to the Securities and Exchange Board of India (SEBI), while 63% of households are aware of market products such as stocks, bonds or mutual funds, a paltry 9.5%—about 32 million households—actively invest.
In a nation of 1.46 billion, the equity cult is confined to a single-digit percentage. Record-breaking IPOs and bull-market rallies are not signs of shared wealth creation but symptoms of massive liquidity sloshing among the wealthy, with markets acting as sophisticated mechanisms for further concentration.
This is not the sign of a healthy, advanced economy with broad-based asset ownership. It is the sign of a bubble inflating within a sealed chamber.
This extreme financial exclusivity leaves India profoundly vulnerable. Market gains are untethered from the ground reality of the overwhelming number of Indians. When the correction comes — triggered perhaps by a global shock — the collateral damage to consumer confidence and the fragile banking system linked to these investments will be severe, with no broad-based shareholder society to cushion the fall.
Wealthy exodus
Perhaps the clearest indictment of the Indian economic environment comes from its wealthy.
According to the Henley Private Wealth Migration Report 2025, about 3,500 high-net-worth individuals (HNWIs) left India last year, taking an estimated $26.2 billion with them. This continues a grim trend, following 4,300 in 2024 and 5,100 in 2023.
Wealth migration is the ultimate barometer of confidence. The affluent do not lightly abandon their homeland, networks and cultural roots. Their departure signals a calculated assessment of risk versus opportunity—and for thousands of India’s millionaires, the calculus points abroad.
The fast-growth mirage of Modinomic
https://asiatimes.com/2026/01/the-fast-growth-mirage-of-modinomics/
They cite concerns over political volatility, bureaucratic hurdles, outdated infrastructure and a punitive, complex tax environment that, paradoxically, fails to raise significant revenue due to its poor design and numerous loopholes for the ultra-wealthy.
This relentless exodus of financial and human capital is a body blow to any nation’s aspirations. It strips away investable funds, shrinks the already minuscule tax base and exports the very entrepreneurial talent needed to build future industries.
The Modi government’s constant narrative of “unprecedented opportunities” rings hollow in the face of this quiet, continuous vote of no confidence from its own economic winners.
Dangerous self-delusion
The portrait that emerges is not of a rising middle power but of a deeply unbalanced polity-economy on the brink. Growth metrics mask inequality, where prosperity is a spectacle watched by the masses but enjoyed only by a small elite, while foundations are likely too weak to withstand coming storms.
The World Bank and IMF, with their dogmatic and outdated fixation on top-line GDP, are not just mistaken; they are enabling a dangerous self-delusion. By blessing Modi’s model, they provide cover for the government to avoid needed and necessarily painful reforms in land, labor, education, taxation and governance.
So far Modinomics has been a masterclass in political narrative over economic substance. It has traded long-term resilience for short-term headlines, and equity for the concentrated enrichment of a privileged few.
As the winds of protectionism and technological disruption gather force, India’s economic miracle is being exposed for what it always was: a mirage in a desert of inequality. And when a mirage fades, all that is left is the harsh, parched and barren reality.
The Economic Survey 2025-26 projects India's nominal GDP to expand to ₹357.14 lakh crore in FY26, up from ₹330.68 lakh crore in FY25, representing an 8% growth rate. This projection highlights continued economic expansion with a 7.4% real GDP growth estimate for the same period.
At 92 to a US$, ₹357.14 lakh crore converts to $3.9 trillion, while Modi govt clams well above $4.1 trillion.
https://www.youtube.com/live/UtF6aUpqSbs?si=5xbN-_woHq-jKs-Z
FPI outflows at a five-month high of ₹35,962 crore
The primary reason behind the foreign investor selling remains weak earnings and rupee depreciation
https://www.thehindu.com/business/fpi-outflows-at-a-5-month-high-of-35962-cr/article70570348.ece#google_vignette
The calendar year began with a continuation of the same trend from the past year where foreign investors have been selling Indian equities. In all, FIIs sold ₹1,66,286 crore in Indian equities in CY2025.
Foreign fund managers, however, were net buyers of Indian equity through the mutual fund route and have been consistent for about four months now. FII, through mutual funds, net bought ₹312 crore in the four months. The selling in equities coincide with the buying of mutual funds signifying a sense of caution on India.
There is a meaningful flow into global emerging market funds, and India has also benefited making the overall flow look better, wrote Sunil Jain , vice-president at Elara Capital, in a research note.
However, the selling by India-focused funds, those who take a long term view in India, persists. “The current phase has extended into a third consecutive week, with $340 million withdrawn this week, following outflows of $360 million and $320 million in the prior two weeks. The pressure remains concentrated in Japan- and Luxembourg-domiciled funds, which have been the primary sources of selling during this period,” Mr. Jain wrote in the note.
The primary reason behind the foreign investor selling remains weak earnings and rupee depreciation. “The Indian market witnessed a decent Q3FY26 earnings season, with aggregate earnings marginally ahead of expectations until now, while beats were 1.3x of misses in the KIE (Kotak Institutional Equities) coverage universe. FPI flows are expected to remain volatile,” said Shrikant Chouhan, head, equity research, Kotak Securities.
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🥇 Pragnya Gupta
@GuptaPragnya
Indian-born economist Jayant Bhandari makes a sharp and uncomfortable claim: that many Indians are celebrating the idea of becoming a “world power” while ignoring harsh economic realities.
According to him, the narrative of strength and global dominance does not match the condition of the average citizen. He argues that when measured by per capita income, widespread poverty, unemployment, and inequality, India ranks among the poorest nations relative to its massive population.
The contrast is stark. On one hand — space missions, global summits, and trillion-dollar GDP headlines. On the other — struggling households, limited job creation, and rising living costs.
His statement is provocative and heavily debated. Yet it forces a critical question: Is national pride being built on aggregate numbers while individual prosperity lags behind?
A country’s true strength is not just in its global image — it lies in the dignity, income, and security of its people.
https://x.com/GuptaPragnya/status/2026235411966947507?s=20
How India Became One of the World’s Biggest Economies - The New York Times
India has grown rapidly despite its slow industrialization, and its economy is now nearly as big as Japan’s.
https://www.nytimes.com/2026/02/27/business/india-economy-gdp.html
India, the world’s fastest-growing large economy for four years in a row, released data on Friday showing that it expanded at a rate of 7.5 percent last year, driven in part by strength in manufacturing.
Many economists, and India’s government, had expected India to become the world’s fourth-largest economy in 2025, overtaking Japan in size. Instead, with the Indian rupee weak against the dollar and Japan’s yen relatively strong, India’s economy stayed a step behind when measured in dollar terms.
But in terms of growth, India far outperformed Japan, which grew only 1.1 percent in 2025. The three largest economies — the United States, China and Germany — all grew more slowly than India last year.
India became the world’s fifth-largest economy four years ago, pushing aside Britain, its former colonial ruler. The International Monetary Fund has projected that India will nudge past Japan in 2026.
The strong growth last year underscores India’s place as one of the world’s most consequential centers of economic gravity, despite breaking every rule about how countries are supposed to modernize. Its rise up the league table of economies has given it geopolitical clout and drawn interest from investors. Yet the shape of its progress is unique. With India’s economic power growing even faster than its population — now more than 1.4 billion people, larger than any other country’s — India is on a course all its own.
The country’s thousands of small businesses hire most of its workers, but an increasing share of growth has come from its biggest companies. Dynastic family firms play an outsize role at every scale, from conglomerates like Mukesh Ambani’s Reliance Group to industry-specific companies.
Sanjiv Bajaj, a scion of a 100-year-old family business with roots in the automotive sector, has had a ringside view of India’s growth. Mr. Bajaj, 56, split off the Bajaj group’s financial services operation from Bajaj Auto in 2007. Bajaj Finserv started with $550 million under management and now controls $53 billion. Its own market value has grown 377 times over.
Much of the company’s success can be traced to India’s policies to modernize technology. In the past decade, the government has pushed biometric IDs and digital payments, pulling a majority of India’s adults into the banking system. India’s own digital payments system now processes 20 billion transactions a month. Most amounts are tiny, Mr. Bajaj said, but the sheer size of the country’s population means that even small shifts in behavior turn into tremendous moneymaking opportunities.
All of that data, Mr. Bajaj said, “allows us to look at every small shop owner and see his inflows and outflows every day.” His company can now make lending decisions at an enormous scale, bringing millions of Indians into the formal credit system, he said.
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Bajaj Auto was much bigger than Bajaj Finserv when the companies split ways, but now the banking company is 50 percent larger. Finance, not factories, has been the hotter sector in India, as it is in the United States.
India’s economy is not as big as economists thought
https://www.economist.com/finance-and-economics/2026/03/05/indias-economy-is-not-as-big-as-economists-thought
Indian officials have been in a boastful mood lately. A government report in December argued that judging by real-time economic indicators, India had overtaken Japan as the world’s fourth-biggest economy. This was to become economic fact once the Ministry of Statistics and Programme Implementation updated how it calculates gdp. So in one sense, the new numbers released on February 27th are a disappointment: gdp was 3.3% smaller than previously thought. In other ways, though, they are a cause for celebration.
The methodological update, the first since 2015, reset the “base year”—which sets the weights for different parts of the economy—to 2022. It also added new data sources that capture a clearer picture of the Indian economy. The country looks more rural than before. Agriculture, responsible for 18% of gdp, appears bigger, largely thanks to more detail on fisheries and dairy. Finance and business services also produced a bit more output, while commerce, hotels and transport generated 26% less. The net effect is a service sector that looks 8% smaller than it did using the previous methodology, and makes up 41% of the economy. Manufacturing, which accounts for 15%, has also shrunk slightly.
On the bright side, India is growing even faster than previously believed. gdp expanded by 7.1% in the fiscal year 2024-25, up from an earlier figure of 6.5%. Other numbers show it has grown quickly since, despite facing high duties on exports to America from August until last month, when the Supreme Court curtailed Donald Trump’s willy-nilly tariffing. Although manufacturing’s share failed to meet Prime Minister Narendra Modi’s goal of a quarter of gdp by 2025, high-tech production and electronics assembly are fuelling growth. Business-friendly reforms to taxes and regulations are starting to pay off, too.
A qualified win for India, then—and also a victory for Indian statistics. Economists have raised doubts over the gdp figures released shortly after Mr Modi came into power 12 years ago, and which revised down growth under the previous administration. The shelving of a survey in 2019 that showed a drop in rural consumption hinted that the government might suppress inconvenient facts. That the new figures show a less rosy picture of Mr Modi’s record should reassure observers that the government will not hide unflattering data. And the figures should reassure Mr Modi that India’s title as the world’s fastest-growing big economy remains secure, even if it is not quite as big as he hoped. ■
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