"It was the best of times, it was the worst of times, .... it was the spring of hope, it was the winter of despair..."
These immortal opening lines of the novel ‘A Tale of Two Cities’ by Charles Dickens seem to be relevant in contemporary India.
Economic Gains And Hope
Over the past decade, the Union government has done some creditable things to give us hope. Among large economies, India is almost alone in managing the Covid pandemic and the turbulence of the Ukraine and Iran wars reasonably efficiently while at the same time exhibiting unusual fiscal responsibility.
There has been an impressive balance of short-term individual welfare to address the immediate needs in a largely poor society and the long-term requirement of economic growth in the form of a massive infrastructure push and promotion of investment and trade. The Union’s fiscal deficit, which had stood at a record high of 9.2% in 2020-21, was brought down to 4.8% in 2025-26 and is targeted at 4.4% in FY 2027. Despite the enormous strain on the public finances on account of the Hormuz Strait closure, the fiscal deficit in FY 2027 will be manageable.
Financial Sector Recovery
The financial sector, which was perilous a decade ago because of indiscriminate lending practices and a high ratio of non-performing assets, has been stabilised with a significant infusion of capital and impressive improvement in recoveries. As a result, public sector banks, which registered an aggregate loss of over Rs 85,000 crore in 2017-18, have now recorded an aggregate net profit of Rs 1,98,000 crore in 2025-26. The gross non-performing assets ratio of public sector banks, which stood at a staggering 14.6% in 2018, has now declined to a historic low level of 1.93%, and the net NPA ratio stands at a healthy 0.39%.
Infrastructure Expansion
Perhaps the most impressive accomplishment of the past twelve years is in the infrastructure. The road network has recorded impressive growth. The highway and road network grew from about 91,000 km in 2014 to over 146,000 km in 2026. National highways’ length grew from about 18,000 km to 48,000 km, and high-speed corridors increased from a paltry 93 km to 2138 km. Average construction per day increased from 11.6 km to 34 km. In shipping, cargo handling capacity has increased from 800 million tonnes per annum (MPTA) to 2760 MPTA. The turn-around time of major ports has reduced from 94 hours to 48 hours. Electrification of rail tracks increased from 21,800 route km to 46,900 route km. All this has been accomplished by record investments in infrastructure as well as an increase in speed of execution.
As a net result of all these initiatives and policies, the annual economic growth rate is around 6.5-7%, even while facing headwinds like global trade barriers and disruption of energy supplies. There is significant improvement of welfare delivery through digital technology. The unified payment interface (UPI) has been a spectacular success, recording over 240 billion transactions, transferring digitally over Rs 314 trillion. Some of the industrial policy initiatives, notably mobile phone manufacturing and exports, yielded excellent results, though other sectors have yet to witness a boom in manufacturing and exports. All these and other news on the economic front are causes of celebration and hope.
Challenges Of Inclusive Growth
And yet we face daunting challenges in the country. I have argued in these columns earlier that we need to focus on three critical numbers unique to India: 1) 85% of the workforce in the unorganised sector without a secure job and monthly wage; 2) over 60% still living in small villages with very few opportunities for upward mobility; 3) up to 46% of workers still engaged in agriculture as the primary occupation even as its share of the GDP is declining and stands at 16-18%. India's growth is real and impressive, though it is still well below our true potential. And yet this growth is not sufficiently impacting the lives of people on a large enough scale. As a result, the formal sector is not able to absorb the 12 million workers who are entering the job market every year; urbanisation is still very slow in comparison to G20 countries or other significant economies; and far too many people are engaged in agriculture with low productivity and wages for want of better opportunities.
There are no easy answers to these great challenges of inclusive growth. They require broad national consensus, determination, innovative policies, competent execution, and, above all, patience and perseverance. Growth is necessary, but not sufficient; we need a massive national effort for about two decades to generate inclusive, sustained high growth to address these challenges. We need to dramatically improve educational outcomes and skill levels to enhance the productivity of our young population. But we also need to improve the growth model to make it more inclusive and employment-generating.
Governance Reforms Needed
All this must be done on a war footing to be able to fulfil the aspirations of our youth without undermining political stability or social harmony. We cannot afford stagnation, exhaustion, and ennui. India missed many opportunities in the past 80 years. We should not miss the current opportunity to improve the quality of life and incomes of all Indians. And we cannot forever postpone the critical governance reforms to make our democracy work better for our people—genuine empowerment of local governments; democratisation of political parties; electoral system reform to make competent, public-spirited citizens electable through ethical and rational means; and a system of rule of law that actually delivers justice, protects the innocent, and incentivises socially productive behaviours.
It is the failure of inclusive growth and governance reforms that causes disquiet and even despair, while macroeconomic fundamentals give us hope. Can our parties, media, and public intellectuals come together and help us face the challenges of unfinished tasks?
The author is the founder of Lok Satta movement and Foundation for Democratic Reforms. Email: drjploksatta@gmail.com / Twitter @jp_loksatta
