Thirty-five years after its landmark economic reforms in 1991, India's journey towards deeper global integration remains a "work in progress" rather than a completed transformation, according to a data-based analysis by investor Shankar Sharma. While the nation has undoubtedly ascended in global standing, the pace of its relative improvement has been slow, Sharma highlighted in his recent findings.
Sharma's analysis, shared via a post on X, evaluates India's performance using global percentile rankings instead of absolute measures, providing a comparative perspective against other economies. The Global Composite Index score for India has moved from approximately the 50th percentile in 1991 to the 62nd percentile in 2024. This indicates an improvement in its relative position, but at a "glacial" rate, with a slope of +0.15 per year. At this pace, India would take roughly seven years to advance by just one percentile rank, assuming other nations continue their current trajectories.
Uneven Progress Across Key Pillars
The investor's comprehensive assessment delves into India's post-1991 trajectory through four broad pillars:
- Economic Prosperity: This pillar, which includes indicators like GDP per capita and labor productivity, saw its percentile ranking rise from 64 in 1991 to 75 in 2024, showing solid improvement.
- External Resilience: Demonstrating the strongest relative gains, India's ranking for external resilience—covering foreign exchange reserves, FDI, and energy dependency—climbed from 94 in 1991 to 98 in 2024.
- Productive Capability: This area, encompassing merchandise exports, economic complexity, and productivity, showed limited improvement, with its ranking slightly declining from 45 in 1991 to 42 in 2024 relative to the rest of the world.
- Manufacturing: Despite a positive trajectory from the 14th percentile in 1991 to the 27th in 2024, manufacturing remains a sector where India has significant ground to cover globally.
Domestic Strength and Global Competition
Sharma's analysis suggests that India's robust domestic market, while a significant strength, might also contribute to an inward-looking bias. Strong internal consumption can fuel growth but may reduce the imperative for companies to aggressively compete in international markets.
This dynamic is particularly evident in India's trade performance. While the country has cultivated globally competitive capabilities in services, pharmaceuticals, and technology, its position in merchandise exports remains relatively modest. The analysis tracks various trade indicators, including global export-market share and manufactured goods exports, highlighting the need for further strides.
In conclusion, Sharma's broader message is not that liberalisation has failed, but rather that its benefits have been unevenly distributed and the pace of India's relative global integration has been slower than its headline growth figures might suggest. Further progress in exports, manufacturing, productivity, and economic complexity will be crucial for India to become a more substantially integrated global economy.