Over the past 15 years, India has executed one of the most significant economic ascents of the 21st century, climbing from the world’s ninth-largest economy to the fifth-largest by 2024, based on GDP measured at constant US dollar prices, according to World Bank data. This rise has not been accidental. It has been shaped by a combination of demographic strength, structural reforms, macroeconomic discipline, and sustained policy focus on long-term growth engines.
Economists describe India’s trajectory as a story of persistence rather than sudden acceleration. “India’s growth over the last decade and a half reflects cumulative reform, not a single breakthrough moment,” said a senior macroeconomist at a Mumbai-based research firm. “The foundations laid in taxation, digital infrastructure, and financial inclusion have steadily translated into economic scale.”
Demographics, Services, and Infrastructure: The Growth Trifecta
A key driver of India’s rise has been its demographic dividend. With a young and expanding workforce, India has been able to support growth in consumption, services, and productivity even as several major economies grapple with ageing populations.
The services sector, particularly IT, financial services, and business process management, remained a backbone of expansion, contributing consistently to exports and employment. Alongside this, government-led capital expenditure on infrastructure—including highways, railways, ports, airports, and digital networks—has reshaped the economic landscape.
Structural reforms amplified these gains. The rollout of the Goods and Services Tax (GST) unified the domestic market, while rapid digitalisation through initiatives such as Digital India and UPI transformed payments, compliance, and service delivery. Financial inclusion deepened through Jan Dhan accounts and fintech-led credit expansion. Meanwhile, manufacturing received a renewed push under Make in India and the Production Linked Incentive (PLI) scheme, aimed at positioning India as a global production hub.
Macroeconomic Stability: Inflation Tamed, Rates Moderated
India’s macroeconomic profile has evolved substantially over this period. Inflation, once a persistent challenge, moderated meaningfully. CPI-IW inflation, which surged into double digits during 2012–13 amid high commodity prices and fiscal slippages, fell below 3% by 2025.
The Reserve Bank of India’s firm monetary stance—particularly during the post-Covid recovery—played a crucial role. Supported by strong foreign exchange reserves, the RBI navigated global shocks while anchoring inflation expectations. As inflation eased, deposit and lending rates declined sharply, apart from temporary pandemic-era disruptions and brief tightening after 2022.
However, currency dynamics told a different story. The rupee depreciated steadily from around ₹45 per US dollar to nearly ₹90, pressured by early-decade inflation, structural trade deficits, and heavy dependence on oil imports. While RBI interventions softened volatility, long-term depreciation remained a defining feature.
Equity Markets: Compounding Through Crises
India’s equity markets mirrored the economy’s resilience. The Nifty 50 delivered a compound annual growth rate (CAGR) of 10.4% over 15 years, weathering events such as the US Federal Reserve’s taper tantrum, crude oil shocks, the NBFC crisis, the Covid-19 pandemic, and the Russia-Ukraine conflict.
“India’s equity story is about compounding through volatility,” said a market strategist at a global investment firm. “Healthier bank balance sheets, manufacturing momentum, and strong domestic investor participation have made Indian markets structurally attractive among emerging economies.”
Changing Sectoral Composition
Financial services consolidated their dominance within the Nifty 50, remaining among the top sectors alongside Energy, IT, and Automobiles from 2010 to 2025. Over time, financials expanded their index weight, while other major sectors saw relative declines.
Pharmaceuticals gained modest ground, while Chemicals and Consumer Discretionary sectors gradually entered the index, reflecting India’s evolving consumption patterns and industrial diversification.
Precious Metals: Hedging Uncertainty
Gold emerged as a standout performer, with prices rising more than six-fold over 15 years, delivering a CAGR of 12.9%. Global crises, currency weakness, central bank buying, and low real interest rates sustained demand, reinforcing gold’s role as a hedge against inflation and rupee depreciation.
Silver, more volatile and industrially linked, rose nearly fourfold, posting a CAGR of 9.7%. Post-pandemic demand from green energy, electronics, and industrial applications drove its rebound.
The Road Ahead
India’s ascent to the top five economies marks a milestone—but not an endpoint. As one policy analyst noted, “The challenge now is translating scale into sustained per-capita income growth.” With reforms ongoing and demographic advantages still intact, India’s economic story appears far from finished.
