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India's Growth Trajectory

Four Decades of Structural Improvement

India's real GDP growth has accelerated over four decades. The pre-reform average (1950-1990) was approximately 3.5% ("Hindu rate of growth"). Post-liberalisation (1991-2003), average growth rose to ~5.5-6%. The high-growth decade (2003-2012) averaged ~8% due to demographic dividend, capital formation, and global tailwinds. Post-2012, growth moderated (~6.5-7%) due to twin balance sheet problem (over-leveraged corporates + bad loans in banks), then recovered. India surpassed the UK to become the world's 5th largest economy by nominal GDP in 2022 and is projected to become the 3rd largest by 2030. The IMF projects India's growth at approximately 6.5% for FY26 — the fastest-growing major economy — despite global headwinds.

Key details

Hindu rate of growth: ~3.5% (pre-1991; term coined by economist Raj Krishna)
Post-1991 liberalisation average: ~5.5-6% (1991-2003)
High-growth decade (2003-12): ~8% average; India second-fastest after China
FY25 GDP growth: ~6.4% (first estimate)
IMF growth forecast (FY26): ~6.5%
India's nominal GDP (FY25): ~$3.9-4.0 trillion (5th largest globally)
India's GDP target: $5 trillion by 2026-27 (revised from original FY25 target)
Twin balance sheet problem: Mid-2010s; over-leveraged companies + NPA-laden banks; resolved through IBC, recapitalisation
IBC: Insolvency and Bankruptcy Code, 2016; created time-bound insolvency resolution mechanism