Shaping India’s future: democracy, innovation, and inclusive growth

India, with its burgeoning economy and a diverse population of 1.4 billion¹, has emerged as a global powerhouse, presenting a wealth of opportunities and challenges in the realm of economic development. Addressing poverty, inequality, and the ongoing development of inclusive growth are critical to ensuring that the benefits of economic progress reach all segments of society.

India's democracy, the world's largest², recently underwent a general election that lasted over six weeks and was the largest election globally to date, with nearly 969 million eligible voters³. Prime Minister Narendra Modi won a third successive term, a testament to his political acumen and the significant political, social, and economic issues at stake.

Two key issues in the election were economic performance and employment. Modi’s government emphasized India’s rising global stature and economic growth, pledging to transform the country’s economy into the world’s third largest, up from its current fifth place ranking⁴. This goal reflects a shared ambition to tap into India’s economic potential fully.

With nearly one in eight people globally eligible to vote, the election underscores the vibrancy and scale of Indian democracy. It’s political stability and policy directions also significantly impact global economics and geopolitics, particularly in the context of its relations with the US and China, both critical global players. The former, the US, will also be holding a presidential election later this year.

India’s remarkable economic growth trajectory has captured global attention. With a robust GDP growth rate, a burgeoning middle class, and a youthful population, India has become a magnet for businesses seeking to capitalize on its immense market potential. In an era where technological advancements frequently disrupt traditional business models and reshape industries, adaptability and leveraging digital talent⁵ have become indispensable for organizations striving to stay ahead.

The entrepreneurial scene in India has witnessed exponential growth as well, with numerous startups making significant impacts across various sectors. Modernization and digital technologies are transforming India and key cities such as Mumbai, Pune, and Hyderabad are hubs for thriving startup networks, local talent, and vibrant innovation ecosystems.

Connecting economic theory with the lived realities of India's population is essential for effective policymaking. Using data-driven models to test and implement economic policies can lead to meaningful improvements in the lives of the poor. This method helps ensure that economic growth is not just about increasing GDP but also about working towards development that benefits all segments of society.

Creating pathways that link theoretical frameworks with practical applications allows for policies that are more effectively tailored to address the specific needs of different communities within India. By grounding policies in empirical evidence, India can better target interventions and achieve more substantial socioeconomic progress. Abhijit Banerjee is one such economist that can do exactly that.

When Abhijit Banerjee was awarded in the prize in Economic Sciences in 2019 alongside Esther Duflo and Michael Kremer, he joined a small but growing list of Indians to be recognized by the committee. Much of his work has been focused on India, the country he grew up in, reflecting his commitment to addressing the nation’s socioeconomic challenges. Regardless of the fact that India has long since accounted for a significant portion of the world’s population, he didn’t always see a space for India in the economic theory he was studying.

“While I was doing my PhD, I started to see if I could use the economic theory that we were learning to make some pathway between the world of economic theory and these lives and whole social structure that I grew up in,” says Banerjee. “For a while, it was a fairly distant connect but I started to see how one could tell stories and what we would need to tell these stories. From that, I started writing models and then thinking about what kind of data you would need to test these things.”

Banerjee’s unique lens, which connects economic theory to the social structures he experienced, has given his work a personalized edge. His research addresses poverty, inequality, and development economics, using experimental methods to evaluate the effectiveness of various policies and interventions aimed at improving the lives of the poor.

Banerjee's contributions provide invaluable insights for institutions looking to address societal challenges in India and beyond. His findings inform strategies and initiatives related to inclusive growth, social impact investing, and sustainable development, ensuring that policies are grounded in real-world data and effectively target the needs of different communities. He’s written four books (one cookbook, in fact), his work has had direct implications on economic thinking, and he has helped guide policymakers looking to address poverty globally.

India's journey towards economic prosperity and inclusive growth, supported by a vibrant democracy and a robust framework for innovation and digital talent, sets a compelling example for the world.

¹India elections 2024: When were they, who could vote and why do they matter?, BBC

²Modi claims victory in India’s election but drop in support forces him to rely on coalition partners, AP News

³India elections 2024, BBC

⁴Modi claims victory in India’s election but drop in support forces him to rely on coalition partners, AP News

⁵How India's digital talent powers global businesses, fuels innovation and spurs entrepreneurship, The Economic Times

⁶India: Gross domestic product (GDP) in current prices from 1987 to 2029, Statista

⁷India Overtakes China as the World’s Most Populous Country, UN