Thirty-five years after the 1991 reforms, India needs a new reform wave focused on deregulation, stronger state capacity, judicial efficiency and faster growth to achieve its ambitious targets. According to Business Standard, while India has transformed many sectors including auto, communication, aviation, and financial services, international experience suggests the country's growth could have been higher. The Chinese economy was about 1.5 times bigger than India's in 1991, but this gap grew to 4.6 times in 2025, highlighting the need for more effective reform implementation. Former Chief Economic Adviser Krishnamurthy V Subramanian believes India can achieve 9% economic growth by accelerating structural reforms to reduce business costs, with the government targeting 8-9% growth to become a developed country by 2047.
Former Chief Economic Adviser Krishnamurthy V Subramanian believes India can achieve 9% economic growth by accelerating structural reforms to reduce business costs. According to reports from PTI, Subramanian stated that macroeconomic stability achieved 7% growth, while institutional reforms could push the country to 9% growth. He emphasized that India achieved above-8% growth when private investment as a share of GDP was more than 30%, while the current level stands at 22-23%, representing a 7-8% shortfall from the target. Subramanian noted that the public capital expenditure over the last five years has laid the necessary infrastructure foundation for private investment, with the banking system positioned to support this investment surge as gross NPAs are near multi-decade lows.
A critical area requiring attention is how the Indian state functions and interacts with businesses and citizens. As reported by Business Standard, the Indian economy is still overly regulated and often micromanaged, with Prime Minister Narendra Modi himself speaking about a deregulation commission. The country faces significant judicial capacity challenges, with over 50 million pending cases in Indian courts affecting both ease of living and doing business. A formal, independent deregulation commission with experts from government and private sector could study state interaction with businesses for 12-18 months and monitor implementation for another year. The commission would focus on reducing regulatory burden and improving business environment, while a time-bound investment strategy for expanding the justice system with more courts and technology could inspire confidence among businesses.
According to PTI, Subramanian identified open-source frontier models as a strategic inflection point, highlighting that Kimi AI now matches leading proprietary models. He stressed that India should become the world's most effective AI deployer across healthcare, education, manufacturing, MSMEs, and public administration rather than building the next ChatGPT. On external challenges, Subramanian offered a distinction between buffers and reforms, stating that "Buffers help you survive a shock. Reforms make you less vulnerable to the next one." He noted that India's comfortable foreign exchange reserves handle immediate shocks, while the structural solution lies in reforms that strengthen private investment and reduce external vulnerability. Subramanian emphasized that the RBI should look through temporary food price spikes provided inflation expectations remain anchored.
Building state capacity will require major reorientation in government finance management. According to Business Standard, India's general government debt was worth over 84% of GDP in 2025, which needs to be reduced at a faster pace. The current debt level of 55.6% of GDP in the current financial year, while higher than historical levels, requires quick reduction to enable greater fiscal space for investment. Higher debt and deficit lead to higher interest payments, which affect government spending priorities and crowd out private investment. The most desirable way to boost revenue is through pushing growth, which will require another wave of reforms to create the right environment for innovation and entrepreneurship, as demonstrated by young Indians building rockets and launching satellites.
