Opinion: A ‘Dead Economy’ Growing At 7.8%

News opinion Opinion: A ‘Dead Economy’ Growing At 7.8%

Last Updated:September 06, 2026, 15:08 IST

There is a simple test for whether an economy is dead. Take its four engines one at a time: household spending, investment, public building, exports

Every first-year economics student learns that an economy runs on four engines. What households spend. What businesses invest. What the government builds. And what the country sells abroad. Add them up and you have GDP.

A dead economy is one where the engines have stopped. So take India’s, one at a time.

What households spend. Private consumption rose 7.1 per cent last quarter. That is not a mood; it is money staying in people’s hands. The income tax exemption threshold has moved from ₹2.5 lakh to ₹12.75 lakh for salaried taxpayers. It is a raise nobody had to ask an employer for. The 2025 GST rationalisation then cut rates on everyday goods and consumer durables.

Money not paid in tax does not sit still. It moves to the showroom. A household that keeps more of its salary and pays less at the counter stops deferring the two-wheeler, upgrades to the small car, replaces the ten-year-old refrigerator. That is why vehicle sales and festive retail have run at record levels.

Set it against 2013, when retail inflation ran in double digits. Ask anyone who managed a household then what a kilo of onions cost, and watch their face change. A pay rise meant nothing, because prices took it before the month ended. Last year, inflation averaged 2.1 per cent, the lowest in the history of the current series.

What businesses invest. Gross fixed capital formation rose 11.9 per cent last quarter, more than double the 5.8 per cent of a year earlier.

Investment is the most abstract word in economics and the most concrete thing in the country. India had 74 operational airports in 2014; it has 165 today, most in towns that had never seen a scheduled flight, so a family in a tier-three district boards a plane instead of a thirty-hour train. On the tracks, 162 Vande Bharat services now run where none existed a decade ago, and rail electrification has gone from about a fifth of the network to 99.6 per cent. The national highway network has grown from 91,287 km to over 1,46,572 km, with construction accelerating from 11.6 km a day to nearly 34.

That last number is not vanity. Every hour cut from a truck’s journey is a rupee cut from the price of what it carries. Roads are how a government fights inflation for a decade rather than a quarter.

That cycle is possible because the banks were repaired. In 2014, public sector banks admitted to bad loans of 4.72 per cent. The real figure, counting hidden stress, was 11.89 per cent, much of it lent to a few large corporate houses. The clean-up forced those losses into the open, and the bankruptcy code made defaulters lose their companies. By March 2026, bad loans were down to 1.93 per cent and profits at a record ₹1.98 lakh crore. A bank hiding losses cannot fund a factory. A clean one can.

What the government builds. When the Jal Jeevan Mission began in 2019, 17 per cent of rural homes had a tap. It is now near 80 per cent. That is not a percentage. That is four hours a day returned to a woman in Bundelkhand who used to walk to a handpump and back, twice, before her children left for school. It is a girl who now attends that school instead of making the second trip.

All of it done while shrinking the debt burden, not inflating it. Government debt has fallen from 90.6 per cent of GDP in 2020 to 83.4 today. Congress also spent. It left behind a current account deficit of 4.8 per cent of GDP and a rupee that slid from 54 to nearly 68 in months.

What we sell the world. Exports rose 12 per cent last quarter, after a record year of $863.1 billion. Electronics production has gone from $31 billion to $133 billion in a decade. In 2014 India had two mobile phone factories; today it has over 300, and 99.2 per cent of the phones Indians use are made here. Foreign direct investment hit a record $94.84 billion last year.

On the ground, that is a young woman in Sriperumbudur on an assembly line that did not exist when she was in school, sending money home every month. Under Congress, the external account was our weakest link. In 2013 Morgan Stanley filed India among the Fragile Five, and S&P and Fitch had us one notch above junk.

Four engines. All four turning at once.

That is how India grew 7.8 per cent last quarter, up from 6.9 a year earlier, in three months containing a US-Iran war, a scare at the Strait of Hormuz, an energy shock and new tariff walls. China slowed to 4.3 per cent, America held at 2.1. The IMF expects the world to grow 2.6.

On September 2, the Japan Credit Rating Agency raised India from BBB+ to A-minus with a stable outlook. The rating was unsolicited: New Delhi never asked for it. It follows S&P’s upgrade last year, India’s first in eighteen years.

So which engine, exactly, is dead?

Congress has never said, because it was never a finding. “Dead economy" was an American president’s phrase, used during a tariff fight against India’s interests. Congress brought it home and aimed it at Indians, then watched its own leaders call the economy robust within a day.

That is what deserves anger. This is not an insult to a Prime Minister. It tells the woman with a tap that her mornings did not change. It tells the town with an airport that its runway is imaginary. It tells the 269 million Indians who left extreme poverty in a decade that they are still where Congress left them.

They are not. India is not. And a party that borrowed a foreign insult to describe its own countrymen should not be surprised when those countrymen remember who said it.

Siddhartha Chepuri is National Member, BJYM Policy Research and Training. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect News18’s views.

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