India’s Economic Growth Under Modi: A Decade of Progress and Challenges
New Delhi, June 10, 2025 – Over the past decade, under Prime Minister Narendra Modi’s leadership, India has solidified its position as a major global economy, rising from the 11th-largest to the fifth-largest economy and recently surpassing Japan to claim the fourth spot. With a GDP of $4 trillion, as noted by NITI Aayog CEO BVR Subrahmanyam, India is on track to become the world’s third-largest economy in the coming years. This article examines the policies, achievements, and challenges driving India’s economic trajectory, drawing on recent data and developments.
A Decade of Economic Expansion
Since Modi took office in 2014, India’s economy has grown by 66% between 2015 and 2025, according to a February 2025 International Monetary Fund (IMF) report. In the financial year 2024-25, GDP expanded by 6.5%, with a notable 7.4% growth in the January–March quarter, outpacing analyst forecasts. This performance has positioned India as the fastest-growing major economy amid global economic uncertainties.
Government policies focusing on infrastructure, digital innovation, and trade have driven this growth. At the Advantage Assam 2.0 Investment Summit in February 2025, Modi highlighted global confidence in India’s economic prospects, attributing it to sustained reforms and public investment.
Key Drivers of Growth
1. Infrastructure Development
The government has prioritized large-scale infrastructure projects, with investments such as ₹13,480 crore ($1.6 billion) in Bihar for initiatives like an LPG plant and power projects in April 2025. These efforts have improved connectivity and industrial capacity, particularly in states like Madhya Pradesh. Foreign direct investment (FDI) inflows rose 14% from $71.28 billion in FY 2023–24 to $81.04 billion in FY 2024–25, signaling strong international trust in India’s market.
2. Digital and Financial Innovation
India leads in global financial technology adoption, driven by initiatives like the Unified Payments Interface (UPI), which has extended digital economy benefits to rural areas. The creative “orange economy” has also flourished, with the over-the-top (OTT) industry growing tenfold in recent years, fueled by India’s storytelling heritage.
3. Global Trade Partnerships
India has pursued strategic trade agreements to boost growth. A UK-India trade deal finalized in May 2025 aims to enhance market access, while a February 2025 agreement with the U.S. set a goal to double bilateral trade to $500 billion by 2030, focusing on sectors like artificial intelligence and semiconductors. These deals strengthen India’s role as a manufacturing and trade hub.
4. Policy Reforms and Employment
The Union Budget 2025-26 prioritizes education, skills, and healthcare, with initiatives like the PM Internship Scheme and the addition of 75,000 medical seats over five years. These aim to address unemployment, which reached 8% in December 2024. Streamlined bureaucratic processes have also facilitated investment and inclusive development.
5. Creative and Cultural Economy
India’s cultural wealth has driven growth in the “orange economy.” At the World Audio Visual Entertainment Summit (WAVES) in May 2025, Modi emphasized the potential of India’s billion-plus stories to fuel content creation. The Indian Institute of Creative Technology (IICT) aims to establish India as a global hub for animation, gaming, and extended reality, supported by over 40 million creators.
Ongoing Challenges
Despite these gains, challenges remain. Private sector expenditure fell to a 10-year low of 33% in FY 2024-25, and net FDI dropped to $0.35 billion, the lowest in two decades, due to increased outward investments by Indian firms. Manufacturing and private investment lag, and unemployment remains a concern, with 76.2% of respondents in a February 2025 India Today survey rating it as a serious issue. Public opinion is divided, with 52.3% rating the government’s economic performance as “outstanding or good” and 28.8% as “poor or very poor.”
Inflation and job creation are pressing concerns, exacerbated by global uncertainties, including U.S. trade policies under President Donald Trump. However, measures like income tax cuts in the 2025 budget and expectations of a strong monsoon are expected to stimulate domestic consumption and rural demand.
Global Role and Future Prospects
India’s economic rise has earned international recognition, with leadership in forums like BRICS and the Asian Infrastructure Investment Bank, alongside advancements in climate action and digital innovation. Modi’s vision of a “Viksit Bharat” (Developed India) by 2047 depends on maintaining an 8% annual growth rate, a goal economists consider ambitious but feasible with sustained reforms.
Morgan Stanley projects India’s economy could reach $6.6–$10.3 trillion by 2035, supported by a 45% rise in venture capital activity from 2023 to 2024. The startup ecosystem, particularly in generative AI and software, attracted $1.7 billion in investments in 2024, highlighting India’s innovation potential.
Conclusion
Under Narendra Modi’s leadership, India has transformed into a global economic contender through reforms, infrastructure investment, and digital advancements. While unemployment and weak private investment pose challenges, strategic policies and international partnerships position India for continued growth. As Modi noted at a May 2025 NITI Aayog meeting, India is both the fastest-growing major economy and a vital global voice. With sustained efforts, India’s path to becoming the world’s third-largest economy appears attainable, promising significant opportunities for its billion-plus population.
