Is India Really a ‘Dead Economy’? Let’s Cut Through the Noise

The "dead economy" jab has unleashed commentary about the political class’s understanding of the Indian economy.

The "dead economy" jab has unleashed commentary about the state of Indian economy and the political class’s understanding of it.

(Photo: Kamran Akhter/The Quint)

Frustrated over his inability to stop the Russia's war with Ukraine, and India not accepting his insane tariffs, Donald Trump sought to dismiss Indian and Russian economies as "dead economies."

His rant—“I don’t care what India does with Russia. They can take their dead economies down together, for all I care”—was, without much thought, echoed by Rahul Gandhi.

Not only did he agree with Trump, he went a step further, claiming that “everyone except Prime Minister Modi and the Finance Minister” knew it. He expanded his diatribe to accuse the Bharatiya Janata Party (BJP) of "destroying the economic, defence, and foreign policy and running the country to the ground."

The "dead economy" jab has unleashed a huge commentary about the state of Indian economy and the political class’s understanding of it. 

So, is India's economy dead, alive, and kicking?

Economies Don't Die

At the simplest level, the value of goods and services produced, transacted, and consumed by the people of a country, also referred to as its gross domestic product (GDP), makes up that nation’s economy. 

Usually, the people/nations are able to grow its economy year after year. Sometimes, the size of an economy declines landing it in a recession. There are episodes of sharper de-growth (10 percent or more) or over a longer period (more than 3 years at a stretch). An economy is said to be in ‘depression’ in such times. 

An economy, however, never ‘dies’. 

The Indian economy, of a fairly large size ($3.6 trillion in 2024-25), with a humungous population of 1.4 billion, grew by 6.5 percent in that year. It is projected to grow by 6 percent-6.5 percent in 2025-26. Amongst the G20 countries, it is expected to be the highest rate of growth.

Only an unthinking and lazy mind can term India a dead economy. 

Economy is primarily businessmen’s arena. Politicians make policies, but they cannot run business. Unfortunately, politicians have, in the name of implementing a socialist agenda or pushing industrial development or protecting national interest in tariff negotiations etc, taken over control of the economy. When they apply politicians’ tools to economies, they end up messing up with them. 

Rahul Gandhi was certainly disingenuous, if not outright clueless, while falling in the trap of Donald Trump and characterising Indian economy dead and blaming the BJP for destroying it. 

Is the Indian Economy Alive and Kicking?

The Prime Minister, Finance Minister, and all those close to the government and the BJP never tire of reminding to no end that India is the largest growing economy. They have also claimed, inaccurately, that India overtook Japan to become the 4th largest economy in 2024-25. 

These claims, if true, would have been good proof of the Indian economy being alive and kicking. Facts, however, are more sobering.

After growing at about 7 percent in the first Modi term (2014-2019), the Indian economy could register growth of only 4.75 percent per annum in the second term (2019-2024). In that term, here was an episode of sharp recession (2020-21), when ill-advised lockdowns led to an unprecedented growth fall of 7 percent. Despite, sharp rebound in 2021-2024, five-yearly growth of 4.75 percent could, in no way, be described as up and running.

The third term seem also be witnessing a growing slowdown. A 6.5 percent growth only in 2024-25, declining from over 9 percent the year before, was an unmistakable sign that the economy was getting into a slower growth groove. Most data for 2025-26 also seem to be pointing towards a sub-6 percent growth.

Trump’s tariff shenanigans, slowing global trade and underwhelming private sector investment in India, seem to support this apprehension.

One should not draw undue comfort from the fact that the Indian economy is recording growth higher than other G-20 countries. Most G20 countries have prospered much earlier than India, and have per capita incomes 10-25 times higher. Many have entered into stable or declining population phase.

China, erstwhile the most populous country (we wear this crown now), has also become an economy that is 5-6 times larger than us, having grown at 8-10 percent for forty years.

India, with an average per capita GDP of $2,500, sits at a lowly 150 (out of 190 odd countries), in World Bank’s per capita income tables.

We shall be deluding ourselves if we believe that we have the best of global economy.

Barely ‘Alive’

The inherent dynamism of the Indian economy—reflected in a population growing at around 0.7 percent annually, hunger among its people to improve their social and economic conditions, millions of skilled young individuals ready to take risks and contribute productively both at home and abroad, and a vast entrepreneurial class—will ensure a sustained positive growth rate of at least 5 percent per annum, for decades to come.

The government can add at least 2–3 percentage points to this growth momentum by adopting the right policies. This includes, among other measures, freeing agriculture from the constraints of subsidies and minimum support prices, implementing a comprehensive privatisation programme, enabling Indian industry to engage with Chinese counterparts in the emerging industrial economy, and giving a massive boost to the services sector—particularly the STEP segment: sports, entertainment, travel, and personal services.

The Indian economy can only be said to be one which is alive and kicking, if it grows at about 8 percent per annum.

Put All Hands on Deck

To make the Indian economy alive and kicking, India needs to undertake bold but highly necessary reforms and discard the weakness of over-protecting holy cows.

In the current tariff negotiations, our over-protection of useless interests in agriculture has become our Achilles' Heel.

Domestically, over governmentalisation of agriculture not only cost us billions of dollars (without meaningfully improving farmers’ conditions) but also keeps so much of our labour (over 45 percent) grossly under-employed. If we liberalise and de-governmentalise it, agriculture sector can grow 6-7 percent annually.

Likewise, instead of boosting employment numbers artificially by including millions of unpaid helper in family enterprises and incentives driven dodgy increases in EPFO payrolls, we have to transform our teeming millions into productive labour and entrepreneurs. 

Right policies, freedom to run honest businesses and reining-in of investigative agencies are necessary for Indian entrepreneurial class to focus its all attention on building businesses and establishing industries, instead of Indian millionaires voting with their feet and shifting bases to Unites Arab Emirates and other parts of the world.

Services remain our best bet. The government must focus on delivering public goods, including right kind of infrastructure. 

If it were to all come together, India can generate 8-10 percent GDP growth for 50 years and take our country to the high income countries’ club.

Let us put all hands on deck, rather than wasting time on debating if India is a dead economy or alive and kicking.

(Subhash Chandra Garg is the Chief Policy Advisor, SUBHANJALI, and Former Finance and Economic Affairs Secretary, Government of India. He's the author of many books, including 'The $10 Trillion Dream Dented, 'We Also Make Policy', and 'Explanation and Commentary on Budget 2025-26'. This is an opinion piece, and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)