India’s Looming Crisis: Demographic Slide, Missed AI Opportunity, and the Urgent Need for Structural Reforms
India stands at a critical crossroads. Under the visionary leadership of Prime Minister Narendra Modi, the country has achieved unprecedented milestones—rising to the world’s 4th largest economy and emerging as a global digital powerhouse. Yet, behind these successes lies a sobering truth: India’s per capita GDP remains around $2,900, ranking 140th globally. This exposes the uncomfortable reality that India’s economic rise is driven more by population size & Corporate prosperity than individual prosperity. Tata and Reliance alone funnel roughly 7.5% of India’s entire output on a revenue basis, and the top nine private conglomerates now turn over the equivalent of 12% of India’s GDP. Clearly, India’s GDP growth is not driven by widespread prosperity. The missing middle class—the real engine needed for a sustainable economy—remains absent.
The bold vision of Viksit Bharat 2047 aims to change this trajectory. However, India’s progress is obstructed by structural barriers embedded in its Congress-era bureaucratic culture—an outdated system that continues to act as the biggest obstacle to realizing India’s potential under one of the finest leaders of our time – Mr. Narendra Modi.
A Visionary Leader versus a Legacy Bureaucracy
Since 2014, Prime Minister Modi has redefined national priorities—emphasizing infrastructure, digital empowerment, healthcare, and innovation. Yet, despite his clear vision, the delivery mechanism—the bureaucracy—remains mired in colonial and socialist-era mindsets. This administrative culture, shaped over decades of Congress rule, is designed to control, not enable. Delayed approvals, procedural red tape, and policy paralysis persist.
In essence, India has a leader providing strategic direction, but a Congress-cultured bureaucracy applying the brakes.
The Demographic Crisis No One Is Talking About
India’s demographic opportunity, long seen as a national advantage, is slipping away. Fertility rates in several states have fallen below replacement levels, and given the current socio-economic situation, I would make this bold prediction: India’s Net Replacement Rate (NRR) is expected to reach 1.0 well before 2047. Are we prepared for this?
The risks are clear:
- Shrinking workforce and labour shortages.
- Rising dependency ratios and fiscal burdens.
- Escalating pension and healthcare costs.
- Slowing consumption and reduced savings rates.
Unlike Japan, which aged after becoming wealthy, India faces premature ageing without prosperity. This crisis has its roots in decades of underinvestment in education, skilling, and healthcare—a legacy of Congress governance. The Modi government is now racing to reverse this, but time is short.
Missing the AI and Innovation Bus
Artificial Intelligence is shaping the future of global competitiveness. While nations like the US, China, South Korea, and UAE surge ahead, India risks missing this revolution—not due to a lack of leadership, but because of systemic inertia.
India’s R&D spending remains below 0.7% of GDP. The Global Innovation Index ranks India at 40th. Startups, though celebrated, focus largely on fintech and service aggregation, not on deep technologies like AI, semiconductors, or quantum computing.
Recognizing this gap, the Modi government has launched a game-changing initiative: the ₹1 lakh crore National R&D Fund—a bold, unprecedented move to catalyze innovation in AI, quantum computing, and clean energy. However, without systemic reforms, even this fund risks getting entangled in bureaucratic red tape. Timely disbursal, transparent execution, and outcome accountability are essential.
Agriculture, MSMEs, and Rising Economic Concentration
India’s agriculture and MSME sectors—the lifeline for rural employment—continue to underperform. Over 40% of India’s workforce remains trapped in low-productivity agriculture contributing just 15% to GDP. MSMEs, employing over 110 million people, struggle due to credit shortages, regulatory bottlenecks, and infrastructure gaps.
Meanwhile, economic power is increasingly concentrated. Nine private companies control nearly 12% of India’s GDP. While their role in driving innovation is commendable, such concentration risks oligarchic structures that weaken inclusive growth. Agriculture, by contrast, employs 45% of India’s population but contributes only 15% to GDP. This highlights the growing economic divide—and who holds greater influence over policymaking.
The economic model inherited from the Congress era, based on accumulated growth and monopolies, must be dismantled. Inclusive, distributed growth must define India’s future.
Structural Reforms: The Forgotten Sector
Despite major initiatives like Digital India and Make-in-India, implementation falters because structural inefficiencies remain unaddressed. India must now treat Structural Reforms as a dedicated economic sector.
A Ministry of Systemic Reforms & Innovation, reporting directly to the Prime Minister, can drive wealth creation in every sector.
Without dismantling the Congress-era administrative machinery, even bold initiatives like the ₹1 lakh crore R&D fund will underdeliver.
Prime Minister Modi and the BJP have articulated a clear, courageous roadmap for a developed India. But the battle is not against global competitors—it’s against India’s own Congress-era administrative legacy.
India’s demographic advantage is fading. AI leadership is within reach, yet elusive. Wealth concentration threatens inclusive growth. But with structural reforms treated as a core sector and governance modernization at the center, India can transform vision into reality.
Viksit Bharat cannot remain a slogan. Under Prime Minister Modi’s leadership, India should now break free from its bureaucratic past and build a future where it leads—not follows.
Dr. Rajendra Pratap Gupta played a key role in drafting the National Health Policy, National Education Policy, and ideated the Viksit Bharat Abhiyan. He is the former advisor to the Union Health Minister, Member of the NEP, and Member of the Khadi & Village Industries Commission. X.com/rajendragupta