In the hushed corridors of the World Bank and International Monetary Fund (IMF), a comforting refrain echoes: India, they insist, is the world’s unstoppable economic engine.
Their quarterly reports and growth projections paint a picture of relentless momentum, a beacon of hope in a fragile global economy. It is a narrative eagerly amplified by Prime Minister Narendra Modi’s government, a central plank of its “Modinomics” branding.
But when you travel beyond the glass facades of Mumbai’s corporate towers and Delhi’s corridors of power, a different India emerges — one of endless queues for subsidized rations, university graduates hawking SIM cards on sweltering street corners and a profound, simmering anxiety.
Here, the much-touted boom is not just leaving people behind—it is a statistical illusion masking deep, structural rot.
A closer inspection of India’s economy reveals not a powerhouse but a patient in critical condition. The so-called vital signs, such as GDP (gross domestic product, meaning the total value of goods and services produced in a country), are being artificially sustained while the underlying organs fail.
Three crucial and often overlooked indicators tell the real story: a shockingly narrow tax base (referring to the small proportion of the population that actually pays significant taxes), an exclusive capital market (where access to equity investment is limited rather than spread broadly) and a persistent exodus of the rich (sometimes referred to as capital flight, where wealthy individuals and their assets leave the country).
Together, they expose an economy marked by dangerous levels of inequality and limited readiness for the dual challenges of US protectionism and technological change.
Not so shiny India
The foundational myth of “Shining India 2.0” is that of broad-based prosperity. The reality, laid bare in the nation’s own tax data, is an economy of breathtaking concentration.
For the 2024-25 fiscal year, the Indian government proudly notes that it has issued approximately 800 million Permanent Account Numbers, or PANs, a key identifier for financial transactions such as opening bank accounts, filing income tax returns and making high-value purchases.
This is hailed as a triumph of formalization, the process of integrating economic activities into transparent, regulated systems. The reality lies in the payments. Of those PAN holders, only about 30-35 million individuals — a meager 2% to 3% of the total population —constitute the entire cohort of meaningful income taxpayers, meaning those who actually pay income tax based on their earnings.
Over 90 million other returns filed result in zero tax liability, where individuals file returns but owe no tax. Wealth concentration is even more stark. By February 2025, only 468,000 people reported annual incomes exceeding 1 crore rupees, or about US$120,000, and only 10,184 reported incomes of about $688,130, a level considered extremely high by Indian standards.
This is not an economy; it is a feudal estate with a digital gloss. The celebrated GDP growth rate, often near 7%, is driven almost entirely by the consumption and investment of this microscopic elite and the sectors that serve them: high-end services, luxury goods and speculative finance. It is a closed-loop circuit of prosperity.
Meanwhile, the Indian agriculture sector remains perennially in distress, manufacturing looks anaemic, the economy is unable to absorb the millions of young Indians entering the workforce and real wage growth for most Indians is stagnant.
This is the devastating failure of Modinomics. Policies, ranging from generous corporate tax cuts to the relentless favoring of a handful of cronies have turbocharged wealth at the top while systematically eroding the earning capacity of the middle class and bottom 40%.
The result is a dystopian paradox: a nation the IMF calls the world’s “fastest-growing” economy, where nearly 800 million people, or more than half the population, rely on government-provided free food grains to avoid hunger.
The World Bank’s claim that this growth is “domestic consumption-led” is, therefore, an act of statistical manipulation. What consumption? The exits of automotive giants like Ford, General Motors and Harley-Davidson years ago were early canaries in India’s coal mine; they saw an Indian subcontinent with too few customers who could actually afford their high-value manufactured goods.
Shares for the few
The second act of this theatrical growth is the supposed democratization of capital. The Modi government points to the stratospheric rise of the Sensex and the explosion in demat (securities) accounts as evidence that ordinary Indians are becoming stakeholders in the nation’s rise.
The facade cracks, however, under the slightest scrutiny. While demat accounts—required to hold and trade securities electronically—surpassed 210 million by the end of 2025, regulator studies and market analyses suggest one-third are duplicates or dormant. The number of unique investors, meaning individuals with only one active trading account, is closer to 136 million, and of these, only a fraction are consistently active.
According to the Securities and Exchange Board of India (SEBI), while 63% of households are aware of market products such as stocks, bonds or mutual funds, a paltry 9.5%—about 32 million households—actively invest.
In a nation of 1.46 billion, the equity cult is confined to a single-digit percentage. Record-breaking IPOs and bull-market rallies are not signs of shared wealth creation but symptoms of massive liquidity sloshing among the wealthy, with markets acting as sophisticated mechanisms for further concentration.
This is not the sign of a healthy, advanced economy with broad-based asset ownership. It is the sign of a bubble inflating within a sealed chamber.
This extreme financial exclusivity leaves India profoundly vulnerable. Market gains are untethered from the ground reality of the overwhelming number of Indians. When the correction comes — triggered perhaps by a global shock — the collateral damage to consumer confidence and the fragile banking system linked to these investments will be severe, with no broad-based shareholder society to cushion the fall.
Wealthy exodus
Perhaps the clearest indictment of the Indian economic environment comes from its wealthy.
According to the Henley Private Wealth Migration Report 2025, about 3,500 high-net-worth individuals (HNWIs) left India last year, taking an estimated $26.2 billion with them. This continues a grim trend, following 4,300 in 2024 and 5,100 in 2023.
Wealth migration is the ultimate barometer of confidence. The affluent do not lightly abandon their homeland, networks and cultural roots. Their departure signals a calculated assessment of risk versus opportunity—and for thousands of India’s millionaires, the calculus points abroad.
They cite concerns over political volatility, bureaucratic hurdles, outdated infrastructure and a punitive, complex tax environment that, paradoxically, fails to raise significant revenue due to its poor design and numerous loopholes for the ultra-wealthy.
This relentless exodus of financial and human capital is a body blow to any nation’s aspirations. It strips away investable funds, shrinks the already minuscule tax base and exports the very entrepreneurial talent needed to build future industries.
The Modi government’s constant narrative of “unprecedented opportunities” rings hollow in the face of this quiet, continuous vote of no confidence from its own economic winners.
Dangerous self-delusion
The portrait that emerges is not of a rising middle power but of a deeply unbalanced polity-economy on the brink. Growth metrics mask inequality, where prosperity is a spectacle watched by the masses but enjoyed only by a small elite, while foundations are likely too weak to withstand coming storms.
The World Bank and IMF, with their dogmatic and outdated fixation on top-line GDP, are not just mistaken; they are enabling a dangerous self-delusion. By blessing Modi’s model, they provide cover for the government to avoid needed and necessarily painful reforms in land, labor, education, taxation and governance.
So far Modinomics has been a masterclass in political narrative over economic substance. It has traded long-term resilience for short-term headlines, and equity for the concentrated enrichment of a privileged few.
As the winds of protectionism and technological disruption gather force, India’s economic miracle is being exposed for what it always was: a mirage in a desert of inequality. And when a mirage fades, all that is left is the harsh, parched and barren reality.
Bhim Bhurtel is on X at @BhimBhurtel
Chump and Modi are really just the same. Its good that they are in power. put in there by people who obviously want dreams rather than real stuff