On 30 August, Bloomberg published a long article (tinyurl.com/yc75r5hk) arguing that India’s ambition to become a developed nation clashes with its growth gap. The argument rests on a comparison that does not hold. It sets a growth requirement, measured in dollars, against India’s achieved growth, measured at constant prices.
Those are two different quantities. Once they are placed on the same footing, the gap shrinks to a fraction of what the article describes.
Start with India’s recent record. The country reported real growth of 7.8% year-on-year in the first quarter of 2026-27. In nominal terms, growth was 10.3%. The reading is consistent with several high-frequency indicators: purchasing managers’ indices, GST collections, sales of two-wheelers and passenger vehicles, bank credit and export growth.
India has held annual growth above 7% since the pandemic, which few nations have managed. It has done so while bringing the average inflation rate down and keeping its public finances in order. India’s debt-to-GDP ratio has fallen by about 7 percentage points since 2020-21, among the sharpest reductions in the G-20.
Real growth has been harder to come by everywhere since the pandemic. Manufacturing competition has intensified, supply chains have been weaponized and trade restrictions have proliferated. Tariff and non-tariff barriers have been erected, and interest rates have risen.
There have been two energy shocks, one in 2022 and another in 2026. The boom in artificial intelligence has been shared by only a handful of nations. For the rest, it has brought uncertainty and steeply higher prices for electronic goods.
It is easier to grow when the global backdrop is benign. It is more creditable to grow when the backdrop is uncertain and at times hostile. India’s post-pandemic performance belongs to the second category. In that light, it deserves credit rather than criticism.
Now to the measurement problem at the heart of the Bloomberg article. Economic size, for the purpose of international comparison, is denominated in a common currency, usually the US dollar. For any country other than the United States of America, the growth rate of dollar GDP is the sum of its nominal GDP growth and the change in its exchange rate against the dollar.
When institutions such as the International Monetary Fund project future growth, they have to make an assumption about the exchange rate. They are not in the business of forecasting currencies. So they assume that relative purchasing power parity holds.
Under that assumption, the rupee depreciates by the difference between Indian and American inflation if the latter is lower, as it usually is. Dollar GDP growth is therefore nominal growth less that difference, which reduces to India’s real growth rate plus the American inflation rate.
Take the period from 2000 to 2024. The article says India’s GDP grew at 6.3% a year over those years. In real terms, that is right. In dollar terms, India’s GDP grew at 8.8% a year. Exchange rates do not always follow inflation differentials. The rupee’s performance against the dollar in 2024-25 and 2025-26 is proof of that. The inflation gap narrowed, yet the rupee weakened. Over long stretches, though, currency movements and inflation differentials tend to converge.
The article’s own numbers show what the correct comparison looks like. It cites India’s per capita income at $2,813 in 2025 and a ‘high-income’ threshold of about $18,000 dollars by 2047. That is a rise of roughly 6.4 times over 22 years, or about 8.8% a year in dollars per head. Add half a percentage point for population growth, and the requirement works out at about 9.3% growth in dollar GDP. That is close to the 9.25% figure quoted in the article, and it is a dollar-denominated requirement.
Set beside 6.3%, a constant-price number, the shortfall looks like three percentage points. Measured properly, against the 8.8% dollar growth India actually recorded, the shortfall is about half a percentage point.
The arithmetic ahead does not call for heroic assumptions either. India’s GDP stood at $3.91 trillion in March 2026. If real growth averages about 7% over the coming decade and American inflation averages 3%, dollar GDP will grow at 10% a year. That takes India to just over $10 trillion by March 2036. Assume the pace then slows to 7% in dollar terms as the base widens. By 2046, GDP would be a shade under $20 trillion.
The article points to India’s net FDI flows, youth employment and its savings and investment rates. These are real constraints that are worth taking seriously. It is worth remembering, though, that India reached 7% real growth while bound by them. They describe headroom rather than a ceiling. As they are addressed, they leave space to do better rather than worse.
There is also a question of what we are measuring. A country’s development status is better judged by the quality of its growth and the standard of living it delivers than by a single measure of economic size. Some countries have reached impressive numbers on that measure by borrowing heavily. The bill falls due long after the headlines have moved on.
The global environment over the next 20 years will be harder for India than it was for the countries that moved from the third world to the first after World War II. India has its task cut out.
That is a fair thing to say. It is not fair to say that India has already failed or has little chance of success. That’s a preconception masquerading as a forecast.
These are the author’s personal views.
The author is chief economic advisor, Government of India.