Indian economist and former Vice-Chairman of the Planning Commission of India Montek Singh Ahluwalia will deliver the 4th BPR Vithal Memorial Lecture virtually at the Center for Economic and Social Studies (CESS) in Hyderabad on December 1, 2025. | Photo credit: Siddhant Thakur
India is entering an economic transformation far more complex than the breakthrough movement of 1991 and must urgently adapt its governance, fiscal strategy, state-level regulatory systems and external economic approach if it is to raise long-term growth from the current trend of 6.5% of GDP to 8%, said economist and former Planning Commission Vice-Chairman Montek Singh Ahlucwalia at the BVPR Centre. Economics and Social Studies, Hyderabad on Monday (December 1, 2025).
Mr. Ahluwalia argued that India’s reform challenges are now qualitatively different from the early stage of liberalization, which primarily required persuasion of bureaucrats, while today’s challenges involve federal politics, climate pressures, technological disruption and global geopolitical fragmentation.
He added that India’s domestic goal of becoming a developed country by 2047, as outlined in the Viksit Bharat vision, requires consistent real growth of around 8%, and warned that such a shift cannot be assumed simply because recent quarterly numbers have occasionally touched higher levels. He pointed out that the core growth rate remains around 6.5%, and while good policy can push it up, bad policy can quickly push it down in a volatile world.
Mr. Ahluwalia outlined three major global changes to which India needs to adapt. The first is the sharp deterioration of the global geopolitical environment. The second shift is a transformation in global trade patterns as economies reassess supply chains, and the third shift is the acceleration of technological change.
“Unlike earlier waves of innovation that allowed labor markets time to adjust, current disruptions can very quickly eliminate large segments of jobs in the modern sector, while new job creation may lag,” he added.
Mr. Ahluwalia argued that the biggest gaps in India’s development remain health and education, which largely fall under state governments and require significant increases in public spending. He said agricultural research, climate-resilient agriculture and water conservation will also require more spending at the state level.
At the same time, the modernization of industry and the strengthening of domestic research and development cannot be done without a greater central fiscal commitment, as private investment in research remains very low.
“Many policy discussions today list dozens or hundreds of reforms, but India needs a narrow set of priorities for the next five years and a national consensus around them. India must choose credibility by aligning its customs regime with economies that remain committed to open markets,” he said.
He further added that India should expect states to grow at different rates, leading to more migration. He said this is economically positive and will create political pressures, particularly in wealthier states with slowing population growth, which will need to attract labor.
Published – 01 Dec 2025 19:23 IST
