India is growing at 7%. It may still be too slow for Viksit Bharat

The central challenge for India's transition to a developed economy is accelerating its Gross Domestic Product (GDP) growth. To achieve the Viksit Bharat goal by 2047, India needs sustained growth of over 9%, a feat historically rare for the nation. A critical risk is falling into the middle-income trap, where a country loses its competitive edge in low-cost manufacturing before transitioning to high-value, innovation-driven sectors. This necessitates significant improvements in productivity, infrastructure, and human capital. The article underscores the need to boost high-tech exports, as India currently accounts for a negligible share of global goods exports compared to competitors like China. Furthermore, a sustained decline in domestic savings poses a threat, as it reduces the availability of cheap capital for domestic investment, forcing reliance on costlier foreign borrowing or Foreign Direct Investment (FDI), which has shown volatility recently.

A major roadblock to sustained economic growth is the qualitative deficit in employment. The data from NITI Aayog revealing that 87 million young Indians are NEET (Neither in Employment, Education, or Training) points to a severe mismatch between skills and market demands. The concentration of the workforce in low-paying self-employment, primarily in agriculture, indicates a failure to transition labour into higher-productivity sectors like manufacturing and services. This structural unemployment not only hampers economic output but also exacerbates inequality and social unrest. For a successful demographic dividend, the economy must generate quality formal jobs, requiring significant investments in education, vocational training, and sectors with high employment elasticity.

The persistent sluggishness in private investment and net FDI, despite the government's reform-oriented posture, raises crucial questions about the investment climate. Enhancing the ease of doing business requires going beyond high-level policy announcements to address ground-level execution bottlenecks. This includes rationalizing complex regulatory frameworks, ensuring contract enforcement, and improving dispute resolution mechanisms. Moreover, the government's role must evolve from merely a provider of infrastructure to an enabler of a competitive ecosystem that fosters innovation and attracts long-term capital. The success of initiatives like Make in India and Production Linked Incentive (PLI) schemes hinges on their ability to catalyze a self-sustaining cycle of private investment and job creation.