India must make much deeper changes if it is to sustain its growth

Improved human capital and a better relationship between the centre and the states will be crucial

At the start of the 18th century India was one of the world’s two largest economies, with China the other. Part of that came down to sheer population and, in India’s case, being colonised by the country which led the Industrial Revolution put paid to that. When it achieved independence from Britain in 1947, India made up just 3% of the world economy (adjusted for purchasing power). In 1991, when its great liberalisation started, the figure was 1.1% (at market exchange rates). Today it is 3.6%, spread between 18% of the world’s population. If it can keep growing at 6% or more, as it has for the past 30 years, then by the time of the modern country’s 100th birthday, it will represent 10% or more of the world economy. And depending on assumptions about growth elsewhere, it could be back in the top rank by the 2070s.

But 30 more years of such growth is a tall order, and it will need a wider and deeper national consensus than that which drove the past 30 years of liberalisation. It will require a new compact between central government, state government and the cities where growth will be concentrated. And, India being India, it will require flexibility. There is no simple one size fits all for the world’s most populous and diverse country.