by BHIM BHURTEL
World Bank and IMF laud India’s rising GDP but Modi’s economic policies have in reality widely missed their mark
In the hushed corridors of the World Bank and International Monetary Fund (IMF), a comforting refrain echoes: India, they insist, is the world’s unstoppable economic engine.
Their quarterly reports and growth projections paint a picture of relentless momentum, a beacon of hope in a fragile global economy. It is a narrative eagerly amplified by Prime Minister Narendra Modi’s government, a central plank of its “Modinomics” branding.
But when you travel beyond the glass facades of Mumbai’s corporate towers and Delhi’s corridors of power, a different India emerges — one of endless queues for subsidized rations, university graduates hawking SIM cards on sweltering street corners and a profound, simmering anxiety.
Here, the much-touted boom is not just leaving people behind—it is a statistical illusion masking deep, structural rot.
A closer inspection of India’s economy reveals not a powerhouse but a patient in critical condition. The so-called vital signs, such as GDP (gross domestic product, meaning the total value of goods and services produced in a country), are being artificially sustained while the underlying organs fail.
Three crucial and often overlooked indicators tell the real story: a shockingly narrow tax base (referring to the small proportion of the population that actually pays significant taxes), an exclusive capital market (where access to equity investment is limited rather than spread broadly) and a persistent exodus of the rich (sometimes referred to as capital flight, where wealthy individuals and their assets leave the country).
Together, they expose an economy marked by dangerous levels of inequality and limited readiness for the dual challenges of US protectionism and technological change.
Not so shiny India
The foundational myth of “Shining India 2.0” is that of broad-based prosperity. The reality, laid bare in the nation’s own tax data, is an economy of breathtaking concentration.
For the 2024-25 fiscal year, the Indian government proudly notes that it has issued approximately 800 million Permanent Account Numbers, or PANs, a key identifier for financial transactions such as opening bank accounts, filing income tax returns and making high-value purchases.
This is hailed as a triumph of formalization, the process of integrating economic activities into transparent, regulated systems. The reality lies in the payments. Of those PAN holders, only about 30-35 million individuals — a meager 2% to 3% of the total population —constitute the entire cohort of meaningful income taxpayers, meaning those who actually pay income tax based on their earnings.
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