India may have recently overtaken Japan to become the world’s fourth-largest economy in nominal terms, but as former RBI Governor Raghuram Rajan reminds us, rankings aren’t everything. While the country clocked an impressive 6.5% growth rate for FY25 and 7.4% in the last quarter, Rajan insists this is no time for complacency. India must aim higher—towards 8–9% annual growth, sustained and inclusive—if it is to truly become a “Viksit Bharat” (developed India) by 2047.

The essence of Rajan’s message is simple yet powerful: aggregate GDP is no substitute for genuine economic development. An economy that rises without converting growth into higher incomes, better jobs, and widespread prosperity risks building its future on sand.

A milestone, not the ultimate mission

Crossing Japan in GDP terms is symbolically significant, but it must not be mistaken for the final goal. India, owing to its vast population, ranks third in absolute GDP terms—but continues to trail far behind in per capita income when compared with developed economies. As Rajan points out, being the world’s most populous nation ensures that overall economic size will rise—but what truly matters is how much income the average Indian earns, spends, and saves.

This is not to underplay the progress made—India has seen commendable economic gains, especially in a globally turbulent environment. But the conversation must now shift from “how big” to “how well” the economy serves its people. Issues like productivity, rising inequality, and income distribution must move to the centre of policy discourse.

The 8–9% imperative

Rajan’s call for 8–9% growth is not wishful thinking—it’s an urgent necessity. While 6.5% growth may look respectable in a slowing global economy, it is simply not fast enough for India to transition into a developed economy within the next two decades.

To achieve such growth, India must unlock long-term investments—both public and private. This requires building a stable, rules-based economic environment, something increasingly at risk amid tariff hikes, policy inconsistencies, and political unpredictability.

The tariff trap and global headwinds

Rajan warns of rising uncertainty in the global system—driven in part by the potential return of protectionist policies under a Trump 2.0 administration. These developments have dampened investor sentiment and may undermine India’s ambitions of becoming a global manufacturing hub.

At one point, export-led manufacturing seemed like the most promising route for India’s economic transformation. But given current global trade tensions, this pathway appears less certain. Rajan suggests that India should look instead toward services, skill-building, and digital innovation—sectors where the country has great potential but hasn’t yet fully capitalised.

There remains significant unmet global demand for high-quality services—from IT to financial back-office work. But to tap into it meaningfully, India must invest heavily in building skilled human capital.

Jobs, skills, and the real development agenda

Becoming a Viksit Bharat isn’t just about building more factories or hitting record highs on the stock market. It’s about ensuring that the millions of young Indians entering the workforce each year have access to secure, well-paying jobs. It’s about formalising the informal economy and turning gig work into sustainable careers.

Rajan’s emphasis on skilling is spot on. India needs a large-scale, outcome-driven skilling mission—agile enough to respond to shifts in market demands and global technologies. Without it, growth will remain uneven and opportunities out of reach for many.

Conclusion

Raghuram Rajan’s voice—often labelled critical—should be seen as a call for constructive engagement. He’s not undermining India’s progress; rather, he’s urging the nation not to settle for less. This is indeed India’s moment—but it could easily slip away if we remain focused on rankings instead of deeper challenges like equity, employment, and sustainability.

The dream of “Viksit Bharat” by 2047 is achievable, but only if India grows both fast and fairly. Bold reforms, smarter investments, and inclusive policies will be essential. Above all, it will take humility—the willingness to acknowledge how far we’ve come, and how much farther we still need to go.