The Illusory Pipeline Dream of India’s $10 Trillion Goal

Recently, PM Modi confidently projected that India's economy will surpass the $10-trillion-mark in 10 years.

In a recent address to a young audience at the Viksit Bharat Young Leaders Dialogue 2025, the Prime Minister confidently projected that India would surpass the 10-trillion-dollar economy mark by the end of the next decade.

(Image: The Quint/@Kamran Akhter)

With the Indian rupee collapsing in its value and the currency becoming increasingly volatile in the international market, the Narendra Modi government’s 10-trillion-dollar-goal appears to be an illusory bubble.

A benchmarked way to reach it now, as undesirable as it may be, appears to be by probably making the value of the rupee (vs US dollar) as weak and poorly placed as possible, not by gaining strength in India’s production capacity nor by enhancing its economic capabilities.  

India’s post-pandemic economic recovery took on a K-shaped pattern, where economic gains have been disproportionately concentrated amongst a privileged few, while vast sections of the population, including its large middle class sections, continue to grapple with deepening inequality and limited opportunities for upward mobility. 

In a recent address to a young audience at the Viksit Bharat Young Leaders Dialogue 2025, the Prime Minister confidently projected that India would surpass the 10-trillion-dollar economy mark by the end of the next decade.

The sobering reality at this point is that India risks being trapped in a growing middle-income bracket, anchored to a modest growth trajectory of about 6 percent.

Against such potential, the 10-trillion-dollar milestone feels almost pedestrian.

What is even more troubling is the government’s framing of this target as a monumental achievement, a narrative that diverts attention from deeper systemic challenges such as income stagnation and rising inequality. 

(Source: MOSPI) 

When analysing the structural composition of growth in Indian economy, it becomes evident that government expenditure has become the foundation of growth, as consumer demand (even in urban areas) has slowed, private investment has stagnated, and net FDI has declined over the years; the quarterly GDP figure takes huge hits, when public spending is halted as was the case during the recent Q-2 performance.  

Unfortunately, this overreliance on government spending primarily supports labour-intensive sectors and welfare programs, creating low-paying, informal jobs that offer short-term relief without addressing structural economic challenges.

This approach fails to foster innovation, skill development, or high-value industries, keeping India’s growth trajectory capped at a modest 6%, far below its potential. 

Breaking the Middle-Income Trap: Global Insights

In contrast to the trajectory of what the Indian economy is going through global experiences suggest something way different, China showcases how a deliberate, multifaceted strategy can lift millions out of poverty and position a country as an economic superpower.  

It embraced private investment, innovation and integrated itself into the global system around the same time as India. However, China went on to transform itself as the "factory of the world," with a staggering 31.2% share of global manufacturing output in 2023, compared to India’s mere 2.8%.  

Beyond scale, China's dominance extends to critical industries such as semiconductors, where it controls 80% of global raw gallium and 60% of raw germanium production, which are absolutely essential components for advanced technology. Paired with sustained investments in research and development.

The graph shows a measure called "Gini coefficient". It provides a way to understand the extent of disparity or concentration in a given distribution, helping to highlight how unequal a society, market, or other system may be. The higher the Gini coefficient, the more unequal the distribution is. 

(Source: World Bank) 

Germany's post-World War II resurgence, known as the "Wirtschaftswunder" or economic miracle, and South Korea's rise from poverty in the mid-20th century both exemplify how strategic policy decisions can transform nations and drive sustained economic growth.  

Germany achieved rapid recovery by implementing the "social market economy," which balanced free-market capitalism with social policies to rebuild its industrial base and infrastructure. This approach not only revitalised its economy but also established a foundation for long-term prosperity. 

Similarly, South Korean planned economy charted its path to economic prominence through a sustained focus on "investment, innovation, and infusion."

By nurturing industries like electronics and automobiles and investing heavily in education, infrastructure, and technological advancement, South Korea created conditions for upward social mobility from the 1970s onwards.

These strategic investments across decades elevated it to a global economic and cultural powerhouse, showcasing how deliberate, multifaceted policies can propel nations out of stagnation and onto the world stage. 

India's Growth Conundrum: A Troubled Path to Inclusive Prosperity

The Modi government's ambitious vision for India's economic future is increasingly based on realism—perhaps too much so. The government's recent tacit acceptance that India may not grow beyond 6% annually signals a willingness to settle for mediocrity.  

This sets India on a perilous path towards a middle-income trap, where the absence of transformative reforms and continued centralisation further deepen the divide between ambition and reality.

The unchecked rise of economic inequality and stagnant reforms reflect the limitations of this vision, which seems more content with managing existing challenges than addressing the underlying causes of stagnation.

India's growing number of billionaires does showcase some degree of success but points to a stark contradiction. India ranks poorly in per capita income and faces a disjointed economy where 94% of the workforce earns less than Rs 10,000 in the unorganised sector. The top 10% of the population captures most of the national income, leaving the rest with little or no benefit from growth. This inequality, underpinned by a lack of broad-based progress, exposes an economy that is more fragile than resilient. 

Furthermore, India's labour force remains shockingly underutilised. As educated youth remain disconnected from meaningful employment, their disenchantment grows.

The skills-job mismatch—hastened by automation and capital-intensive growth—results in job substitution in sectors where jobs had traditionally been stable. Innovation is a must, but it cannot resolve the present-day employment problem for large swathes of people underemployed and getting increasingly angry. 

The graph illustrates 'jobless growth,' a phenomenon where GDP rises without a corresponding increase in employment opportunities, highlighting the disconnect between economic expansion and job creation.

(Source: World Bank, CEIC Data)

Pegging for Inclusive Growth

In the earlier works of development scholars like Ajit Ghose, Deepak Nayyar, Raghuram Rajan, and more recently Rohit Lamba, a roadmap that focuses on revitalising employment-intensive sectors and creating opportunities for those left behind by the current growth model is highlighted.  

Micro, Small, and Medium Enterprises (MSMEs), for example, are the backbone of India's economy, crucial for providing jobs to unskilled and semi-skilled workers.  

With the right policies—such as reducing bureaucratic red tape, ensuring easier access to credit, and integrating MSMEs into digital and global supply chains—India could unleash the full potential of this sector.  

Ajit Ghose’s analysis in his paper ‘India’s Exclusive Growth’ highlights how a thriving MSME sector could absorb millions of workers currently trapped in the unorganised sector, offering them better wages and job security. 

However, the government has failed to prioritise these crucial reforms. Instead of fostering an environment conducive to MSME growth, the government continues to focus on high-profile but ultimately ineffective initiatives, unable to address the deep structural issues that hamper progress. 

A shift is needed from the government’s focus on capital-intensive industries to labour-intensive manufacturing sectors like textiles, food processing, and light engineering. These sectors can generate large-scale employment for the country’s unskilled and semi-skilled workforce.

Despite this, investments in infrastructure, regulatory streamlining, and vocational training programs are critical to making these sectors thrive that still remains inadequate. 

Sectors such as tourism, healthcare, and education hold immense potential for job creation, yet these low-value-added, skill-based services have been largely ignored by the current government.

As Raghuram Rajan and Rohit Lamba have proposed, these labour-intensive services are accessible to workers with basic skills and are essential to absorbing the unemployed and underemployed. The government's lack of investment in these areas means millions of people continue to be left out of the economic gains, worsening inequality instead of addressing it.

A critical disconnect also exists between the skills taught in schools and colleges and what the job market demands. Vocational training, apprenticeships, and curriculum reforms that align education with industry needs could equip India’s youth with the skills necessary for the modern economy.  

Yet, despite the pressing need for such reforms, the government has failed to take substantial steps to bridge this gap. The importance of focusing on high-priority goods and services that cater to broader societal needs, such as affordable housing, renewable energy, and rural infrastructure has largely been ignored. These sectors not only provide jobs for low-skilled workers but also act as essential drivers of growth.

India’s current growth model, which prioritises the wealthy while leaving the majority behind, is neither inclusive, nor sustainable nor just.

The government’s failure to acknowledge growing inequality, informality or in adopting a more holistic growth strategy continues to stifle the potential of millions of people.  

For a country with vast human capital, it is both a moral and economic imperative to pursue a growth strategy that benefits all, not just the few. While the path to 8% growth and beyond is undeniably challenging, it is far from impossible.

By focusing on reviving the growth potential of MSMEs, promoting labour-intensive manufacturing, investing in differential skill-based services, and addressing the increasing education-employment gap, India can ensure upward mobility in its human capital potential for enhancing productivity which is a much more useful benchmark of measuring its growth and development story than being obsessed on hitting a 10 trillion mark.

Creating a more prosperous, inclusive, equitable future for all citizenry needs precedence and priority for any government, while letting the market and private sector invest (and grow) beyond potential. 

(Deepanshu Mohan is a Professor of Economics, Dean, IDEAS, Office of Inter-Disciplinary Studies, and Director of Centre for New Economics Studies (CNES), OP Jindal Global University. He is a Visiting Professor at the London School of Economics, and a 2024 Fall Academic Visitor to the Faculty of Asian and Middle Eastern Studies, University of Oxford. Ankur Singh is a Research Assistant with the Centre for New Economics Studies, OP Jindal Global University and a team member of its InfoSphere initiative. This is an opinion article, and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)