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Paper Title

What Ails the Indian Economy? Crossroads and Recovery

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Registration ID: IJNRD_327834

Published ID: IJNRD2608174

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Keywords

Indian Economy, Jobless Growth, Agrarian Distress, K-Shaped Recovery, Twin Balance Sheet Crisis, Human Capital Deficits.

Abstract

Between 2014 and 2026, the Indian economy underwent a period of structural transformation, ambitious fiscal experimentation, and rapid digital public infrastructure rollout, maintaining its position as the world's fastest-growing major economy. However, beneath headline real Gross Domestic Product (GDP) growth rates averaging 6.5 per cent to 7.5 per cent, deep-seated structural vulnerabilities persisted. This paper provides a comprehensive economic diagnostic of India’s macroeconomic performance across these twelve years. Utilising empirical evidence from central bank bulletins, multilateral financial institution evaluations, governmental surveys, and peer-reviewed scholarly literature, this study evaluates the core structural ailments afflicting the Indian growth model. The primary structural imbalance lies in the persistent growth-employment paradox. Despite strong national output, economic expansion has been characterised by premature deindustrialisation and jobless growth, where capital-intensive services dominate output while over 88.0 per cent of the workforce remains trapped in low-productivity informal employment or underemployment. Agriculture continues to absorb nearly 44.0 per cent of the population while generating less than 16.0 per cent of Gross Value Added (GVA), a distortion exacerbated by the COVID-19 pandemic’s reverse migration shock and prolonged real wage stagnation in rural areas. Simultaneously, private corporate Gross Fixed Capital Formation (GFCF) remained muted despite historic corporate tax cuts, balance sheet cleanups, and the resolution of the Twin Balance Sheet Crisis through the Insolvency and Bankruptcy Code (IBC). The state was forced to step in as the primary engine of capital expenditure (Capex), building physical infrastructure but pushing combined general government debt to over 80.0 per cent of GDP. This investment slowdown, combined with post-pandemic income polarisation, produced a distinct K-shaped consumption trajectory, where affluent urban segments drove premium demand while low- and middle-income households faced compressed real financial savings and rising debt. Furthermore, persistent underinvestment in social infrastructure—specifically public healthcare and foundational education—threatens India’s ability to reap its demographic dividend before population ageing sets in. This paper concludes that sustaining long-term, inclusive development requires shifting policy from an exclusive reliance on public capital spending toward structural interventions that enhance labour intensity in manufacturing, revitalise rural purchasing power, support micro-, small-, and medium-sized enterprises (MSMEs), and build robust human capital foundations. India’s Economic Crossroads (2014–2026): Growth, Vulnerabilities, and the Path Forward.

How To Cite (APA)

S. Ramaswamy, S. Gnanasaranya, V. Kaveri, M. S. Fathima Begam, & S. Amutha , S. Arun (August-2026). What Ails the Indian Economy? Crossroads and Recovery. INTERNATIONAL JOURNAL OF NOVEL RESEARCH AND DEVELOPMENT, 11(8), b769-b781. https://ijnrd.org/papers/IJNRD2608174.pdf

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Other Publication Details

Paper Reg. ID: IJNRD_327834

Published Paper Id: IJNRD2608174

Research Area: Other area not in list

Author Type: Indian Author

Country: -, -, India

Published Paper PDF: https://ijnrd.org/papers/IJNRD2608174.pdf

Published Paper URL: https://ijnrd.org/viewpaperforall?paper=IJNRD2608174

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Publication Timeline

Paper Submission
08-08-2026
Peer Review
Through Scholar9.com Platform
Paper Acceptance
14-08-2026
Paper Publication
17-08-2026

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