Former Chief Economic Adviser Arvind Subramanian, who served during the initial four years of the Modi administration, has challenged the prevailing narrative of India as a rapidly ascending global economic power. While commending significant government achievements, he cautioned that the country's economic ascent might be "a bit overdone."
Modi Government's Key Achievements Highlighted
Speaking at the State of Asia 2026 event, Subramanian acknowledged three major areas where the Modi government has made substantial progress:
- Welfare Delivery: He praised the overhaul of the welfare system, noting improvements in providing free grain, bank accounts, toilets, running water, and increasing cash transfers to citizens. Subramanian described this as India becoming a "burgeoning Europe, as it were, with social insurance."
- Physical Infrastructure: The economist credited the government for significant advancements in improving the nation's physical infrastructure.
- Digital Technology: Leveraging digital technology to enhance India's global standing was also highlighted as a key success.
Concerns Beneath the Headline Numbers
Despite these achievements, Subramanian asserted that India's strong headline economic growth figures present an incomplete picture, masking underlying weaknesses. He pointed to several "serious under-accomplishments":
Persistent Rupee Weakness
Subramanian noted the Indian rupee's sustained pressure over the past three years, more so than almost any other emerging market economy, even prior to the Iran war. He highlighted that the central bank has spent "hundreds of billions of dollars" defending the currency, suggesting a tangible sense of why investors might be cautious.
Investor Confidence and Manufacturing Gaps
The former CEA expressed concern over investor confidence, suggesting that a dissonance exists between reported growth and the reality in financial markets. Regarding the "China Plus One" strategy, while acknowledging Apple's (via Foxconn) increasing manufacturing presence in India as a significant success, he argued that India has largely failed to capture a substantial share of global labor-intensive manufacturing. Despite possessing approximately 25% of the global labor force among developing countries, India's share of low-skill manufacturing exports remains a modest 2.5% to 3%.
"The conventional wisdom, not just within India, all countries have grandiose ambitions for themselves. That's conventional wisdom, but we have to look a bit harder at that question. And my assessment is that it's a bit overdone," Subramanian stated.
Subramanian concluded that these factors—the pressure on the rupee, concerns about investor confidence, and limited manufacturing growth—indicate that while accomplishments exist, they do not tell the entire story of India's economic rise.