Is India’s Economy Dead as Donald Trump Claimed?

Context: After imposing a 25% tariff on India, Donald Trump posted on social media that he did not care if India and Russia “take their dead economies down together”

Is India’s Economy Dead as Trump Claimed?

• No. The claim is politically charged and factually incorrect.
• From 1995 to 2025, India’s economy has grown more rapidly than the US, UK, Germany, and Japan.
• In 1995, India’s economy was less than 5% the size of the US; by 2025, it will be nearly 14% of the US economy.
• Only China, India, and Russia have grown relative to the US; America’s key allies have shrunk in comparison.
• Compared to Japan — whose economy is smaller in 2025 than in 1995 — India has made substantial economic progress.

Status of the Indian Economy

• India is among the fastest-growing major economies, expected to become the 3rd largest economy globally in a few years.
• Its GDP in 2025 is nearly 12 times what it was in 1995.
• India contributes to around 16% of global growth (IMF data).
• It has moved from being in the “Fragile Five” to being seen as a “bright spot” by global financial institutions.
• Exports and manufacturing have increased, though not uniformly across sectors.

Concerns for India

• Slower growth post-2011-12, now averaging around 6%.
• Manufacturing underperformance: CAGR of 4.04% since 2019–20 vs 4.72% for agriculture.
• Low export share: Just 1.8% of global goods exports; 4.5% in services.
• Persistent rural distress: The Majority of farmers live at subsistence levels.
• Widening inequality and high poverty: ~24% below the World Bank poverty line.
• Low female labour participation and poor quality of jobs for women.
• Education-employment mismatch: Higher education often leads to higher unemployment.
• Weak human development: Health and education outcomes remain poor.

Way Forward

• Boost Manufacturing: Strengthen PLI schemes, support MSMEs.
  • Eg., Apple & Samsung expanding under PLI.
• Expand Exports: Sign trade deals, improve logistics.
  • Eg., India–UK CETA.
• Strengthen Rural Economy: Support agri-processing, FPOs, cold chains.
  • Eg., PM-FME (Formalisation of Micro Food Processing Enterprises) helps rural food units grow.
• Tackle Inequality: Enhance DBT schemes, reform taxes.
  • Eg., MGNREGA cushioned rural distress.
• Empower Women: Encourage female skilling & entrepreneurship.
  • Eg., 70% of MUDRA ‘Shishu’ loans go to women.
• Align Education with Jobs: Revamp curriculum, industry tie-ups.
  • Eg., Skill India Mission and PMKVY (Pradhan Mantri Kaushal Vikas Yojana) trains youth in market-ready skills.
• Invest in Health & Education: Raise public spending, improve access.
  • Eg., Ayushman Bharat Digital Mission expands care.

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