NEW DELHI: When the Narendra Modi government completes twelve years in office this week, the headline number that matters is India as the world’s fourth largest economy. But it is not just the size of the economy; it is the stability of the scaffolding beneath it, and the way it has begun to carry industrial weight, that is most important.
The distance travelled is easy to forget. Barely a year before this government took office, Morgan Stanley had branded India one of the “Fragile Five” – the cluster of emerging economies whose wobbly currencies and twin deficits left them most exposed to the next global shock. A decade on, that label has been inverted. The country once flagged as a risk is now the one the world courts for growth.
Let’s start with the sheer arithmetic of expansion. India’s nominal GDP has roughly doubled over the past decade, climbing from about $2.1 trillion in 2015 to around $4 trillion now – a growth of about 100 per cent.
India has been, by most counts, the fastest-growing major economy. Financial Year 2026 (FY26) real growth came in at 7.7 per cent on provisional estimates – tying for the sharpest expansion since FY22 – with the fourth quarter alone clocking 7.8 per cent. What makes this even more important is the macro stability that comes with it.
The fiscal story is significant, and it deserves recognition because consolidation rarely makes for good politics. The government has walked the deficit down from pandemic-era highs above 9 per cent of GDP to 4.4 per cent in FY26 and targeted 4.3 per cent in FY27, while the revenue deficit narrowed to its lowest since FY09. Crucially, this was achieved not by slashing investment but by improving the quality of spending. The revenue deficit shrank so that capital expenditure could grow.
And the economic engine that has fired up the most has been public capex – which expanded from roughly Rs 2 lakh crore in FY15 to Rs 12.2 lakh crore budgeted for FY27, a six-fold jump that has pulled effective capital spending from a pre-pandemic average of 2.7 per cent of GDP to around 4 per cent. Roads, railways, ports and waterways now absorb more than half of that outlay. The premise of the Modi economic model has been that the state crowds in by building the spine – physical and digital – on which private capital can run. The digital spine is its own quiet revolution. The Digital Public Infrastructure stack – Aadhaar, UPI, direct benefit transfers – has formalised the economy, plugged welfare leakages and created a real-time payments rail that the rest of the world now studies as a template. It is arguably the most globally exportable thing India has built in this period.
The one piece still missing from this picture is private capital, which has been a laggard through much of this cycle, content to let the government do the heavy lifting. For the infrastructure now in place to be tapped to its full potential, that has to change – private investment must finally pick up the baton the state has been holding out.
The more consequential bet of these twelve years has been industrial – that India can manufacture its way up the value chain and not just remain a services-led economy. Through Make in India, the Production Linked Incentive (PLI) schemes and the broader doctrine of ‘aatmanirbharta’, the wager is being placed with real money, and the early returns in some sectors have been striking.
Electronics is the biggest success story of the PLI scheme, where India has gone from importing mobile phones to becoming the world’s second-largest manufacturer. Mobile phone production more than doubled from Rs 2.14 lakh crore in FY20 to Rs 5.5 lakh crore in FY25; exports rose roughly eightfold, from Rs 0.27 lakh crore to Rs 2 lakh crore over the same period. Overall
