India’s Economic Leap!

India’s recent ascent to become the world’s fourth-largest economy, surpassing Japan, is a landmark moment. On paper, it symbolises India’s growing global economic stature and the promise of a brighter future. Beneath this fancy and impressive headline lies a variegated reality of institutional deficiencies that calls for a deeper, more meticulous examination. What does this growth truly mean for India’s 1.4 billion people? Does being the fourth largest economy guarantee improved living standards, or does it mask persistent and widening inequalities?

According to the International Monetary Fund (IMF), India’s nominal GDP is projected to cross $4.2 trillion in 2025, reflecting rapid economic expansion fueled by demographic advantages, digital innovation, and a growing service sector. Yet, this macroeconomic milestone coexists with unembellished and grim realities. Despite the overall GDP growth, India’s per capita income remains low, ranked around 125th globally, and millions still grapple with poverty, unemployment, and inadequate access to healthcare and education.

For a college student like me, preparing to enter the job market, India’s rise is a mixed message. While the country celebrates its economic leap, I face the abashing reality of scarce jobs and stiff competition. This disconnect between impressive GDP figures and everyday challenges illustrates the phenomenon economists call ‘jobless growth,’ a worrying trend for millions of young Indians hoping for a dignified livelihood.

The comparison with Japan, a country India has now overtaken, highlights these structural disparities vividly. Japan’s GDP per capita is nearly ten times higher than India’s, and its Human Development Index (HDI) ranking is far superior. Japan’s economy is mature but technologically advanced, diversified, and underpinned by robust institutions. India’s rise is propelled by sheer scale and rapid growth, but questions about the quality and inclusiveness of that growth persist.

The conundrum of jobless growth

Despite India’s impressive GDP figures, the term ‘jobless growth’ captures a troubling paradox. While the economy expands, job creation—especially in quality, formal employment—is lagging behind. According to the Periodic Labour Force Survey (PLFS) 2023-24 by the Ministry of Statistics and Programme Implementation (MoSPI), the overall unemployment rate for individuals aged 15 and above stood at 3.2% in the period from July 2023 to June 2024. However, this aggregate number masks deeper structural issues. For instance, the urban youth unemployment rate (ages 15–29) reached 16.8% in the October–December 2024 quarter, highlighting the sharp divide between headline employment figures and the ground realities faced by younger Indians entering the job market.

This gap hits young Indians especially hard. Despite an expanding economy, millions of youth enter the workforce every year only to find limited formal employment opportunities. A significant portion of jobs created are in the informal sector—characterized by low wages, job insecurity, and lack of social protections—which fails to provide the dignified livelihoods that economic growth promises.

The roots of this paradox lie in the structural composition of India’s economy. The services sector accounts for over 55% of GDP but employs less than a third of the labor force. Meanwhile, manufacturing—historically a source of mass employment—remains stagnant at around 15% of GDP and employs only 11.6% of the workforce, as per the Annual Survey of Industries 2023. Challenges like inadequate infrastructure, regulatory complexity, and a lack of large-scale labor-intensive industries hinder this sector’s capacity to absorb India’s massive working-age population.

Without targeted policy interventions to boost labor-intensive sectors and improve skill development, India risks perpetuating this jobless growth trend—where impressive economic numbers fail to translate into dignified livelihoods for millions.

Structural inequalities and the two-speed india

India’s growth has also been marked by striking inequalities—geographic, social, and economic. The benefits of expansion are often concentrated in urban pockets and among a relatively small section of the population with access to capital, education, and networks. Meanwhile, rural India, informal workers, and marginalized communities remain largely disconnected from the engines of growth.

According to the World Inequality Report 2022, the top 10% of India’s population holds over 57% of the national income, while the bottom 50% accounts for only 13%. This widening gap not only undermines the social fabric but also constrains long-term economic sustainability by weakening demand and reducing social mobility.

Infrastructure and institutional quality remain deeply uneven across states. While southern and western states lead in ease of doing business and health and education indices, parts of eastern and northern India continue to lag. These internal disparities raise important questions about the inclusiveness of India’s growth story: Can a nation truly rise when large swathes of its population are left behind?

A misplaced celebration?

India’s rise in the global economic order is often cited as evidence of its inevitable ascent to superpower status. But this narrative is built on shaky ground. The country’s newfound global relevance rests more on the vulnerabilities of others—China’s slowdown, Western geopolitical realignments—than on internally consistent policy or institutional strength.

The “China+1” discourse may offer short-term investment opportunities, but India still lacks the deep manufacturing base, logistical infrastructure, and regulatory predictability to capitalize fully on this shift. In fact, foreign capital remains concentrated in tech and service sectors—those very segments that create the fewest jobs relative to their scale.

What is projected as a moment of arrival might instead be a premature celebration. Without redistributing the dividends of growth through stronger institutions, equitable policies, and robust social safety nets, India risks reinforcing a hollow version of development—where GDP numbers climb, but public trust and quality of life remain stagnant.

Growth without dignity is a mirage

A nation’s greatness cannot be measured in GDP rankings alone. To call India the fourth-largest economy while ignoring the widening chasm between the rich and the rest is not just misleading—it is dangerous. It signals an economic philosophy that values scale over substance, optics over outcomes. What good is a multi-trillion-dollar economy if millions still lack access to clean water, secure employment, or quality education? If lakhs of young Indians must settle for gig work with no protections, if rural hospitals remain understaffed, and if public universities are underfunded—what, then, is the real meaning of progress?

India’s growth must not only be questioned—it must be redirected. Toward institutions that prioritize people, toward policies that invest in human capital, and toward a vision of prosperity that is felt in everyday life, not just in financial headlines. Until then, calling India the fourth-largest economy is like celebrating the size of a ship while ignoring the fact that most of its passengers are still stranded below deck.

Malik Daniyal is a final year economics student at University of Delhi.