What happened to Modi’s $5 trillion economy promise?
Welcome to The India Fix by Shoaib Daniyal. A newsletter on Indian politics. As always, if you’ve been sent this newsletter and like it, to get it in your inbox every week, sign uphere(click on “follow”). Las. . .
Welcome to The India Fix by Shoaib Daniyal. A newsletter on Indian politics. As always, if you’ve been sent this newsletter and like it, to get it in your inbox every week, sign uphere(click on “follow”). Las week, Union finance minister Nirmala Sitharamanannouncedin Parliament that India’s gross domestic product would hit the $5 trillion mark in 2029. It’s a banal projection predicated on the simple maths of compounding. The Indian economy, valued at nearly $4 trillion, is growing so it will inevitably touch that mark one day. Yet, most Indians will be hit by an uncomfortable sense of deja vu when they read the phrase “$5 trillion economy”. It has functioned as a leitmotif of the Modi era, meant mostly to gaslight Indians about the true state of the economy. Like a parent trying to stave off a child’s tantrum by promising something desirable in the future, the Modi government has repeatedly flashed the prospect of a “$5 trillion economy” to Indians with little explanation on how it would to be achieved – and no explanation when it wasn’t. Tall claimsAt the start of 2018, Modi kicked it off bypromisingat the World Economic Forum in Davos, Switzerland that India would be a $5-trillion economy by 2025. Later that year, the government said that it had constituted a working group topreparea “roadmap towards achieving a 5 trillion dollar economy by 2025”. In 2019, Modi moved the deadline forward. At a BRICS summit in Brazil, hesaidIndia would be a $5 trillion economy by 2024. What changed in his government’s modelling was never explained. The financial year 2020-’21 was the worst in independent India’s history. The economyshrankby more than 7% thanks to the Union government’smessy, draconian Covid lockdown. No other major economy has suffered during Covid like India’s economy did. Yet, bizarrely, this made no difference to the government’s $5T promises. In 2022, the government’s second-most powerful person, Home MinisterAmit Shah, said India would become a $5 trillion economy by 2025. A couple of months later, Foreign Minister S Jaishankarrepeatedit in Cyprus. What happened when the deadline of 2025 was actually reached with no $5 trillion in sight? The government simply ignored it. I think it is almost certain that India's GDP in calendar year 2025 will be around USD 5 trillion. We will find out. pic. twitter. com/HUOQBx4dS7— Harsh Gupta Madhusudan (@harshmadhusudan)December 14, 2023Experts had pointed out the implausibility of the Modi government's claims at the time. Gaslighting 101But remarkably, even then, it did not stop using the $5 trillion trope. In 2025, Modi spoke about the GDP mark – but rather than fixing a concrete deadline,waxedpoetic that “the day is not far” when India will become a $5 trillion economy. Slowly, the government de-emphasised this target and started to talk ofanother: a $35 trillion, “fully developed economy” by 2047. An aim so far in the future neatly avoids the risks of the previous $5 trillion deadline. The $5T saga is at one level a self-propelled satire on Indian politics. But it also has important lessons on Modi’s political tactics as well as the Indian economy’s near-term future. For one, the government believes in Big Promises. From the end of the Congress-led United Progressive Alliance era, Modi gained admirers by promising to transform India. “Acche din” was the slogan that captured it: unlike the purported stasis of Manmohan Singh, Modi would bring in good times. Second, is the lack of questions or public pressure. With a pliant media, no one bothered to query the government on its pollyannaish targets. For years, the Modi government was allowed to present a misleading picture of economic health. This becomes even more acute when one takes into fact that GDP growth data might itself beoverstated. And even with these alleged GDP computing errors, India’s economic rank has slipped tosixth placefrom fourthjust last year. Far from $5 trillion, India is yet to even reach the $4 trillion mark, the Modi governmenttoldParliament on Tuesday. The government and its supporters have tried to blame the mismatch between its projections and reality on the rupee-dollar exchange rate. This is circular reasoning. The falling value of the rupee itself is a strong indicator of the weakness of the Indian economy, given it is driven by foreign investorspulling outmoney from the country. In Delhi now over 6 weeks, I’ve been analyzing India’s economy: It’s in poor shape. With youth unemployment sky high, education in a mess, global confidence low, with O net FDI, pollution at record levels with no action, the only hope is the nation’s youth that has realized this. — Kaushik Basu (@kaushikcbasu)July 28, 2026Former chief economist of the World Bank flags zero foreign investment. Public angerThe bad news for Modi is that the era of blatantly overstating targets might be ending. Modi’s third term has seen significant anger vented by its own white-collar supporters – first online and then during the so-called cockroach street protests. Even more troublingly, the Indian economy faces a serious challenge with the rise of generative artificial intelligence. India’s information technology space is now under severe threat since, as theFinancial Timesexplains, the “formulaic tasks that underpin the industry, which employs 6 million people and contributes about 7% of GDP, can now be performed by generative AI”. Even more worrying is the fact that India has no safety net. Modi’s manufacturing push has failed so badly, manufacturing as a share of GDP has actually fallen under him. Indians are still one of the poorest people on the planet, with the country’s per capita GDP languishing at the bottom, lower than small neighbours such as Sri Lanka and even Bangladesh. Moreover, as the sustained student protests in Jharkhand show, the Opposition might have few answers to how deep the problems of India’s economy are. The wide gap between the $5T projection and reality should worry Modi and his supporters. But it should also worry all Indians. We welcome your comments atletters@scroll. in. $5 trillion GDPIndian economyGenerative artificial intelligence