The latest GDP report continues to reverberate in Indian policy circles, with the 7.8 per cent first-quarter growth figure celebrated and dismissed in equal measure. The controversy stems from concerns around methodology, transparency and the veracity of the underlying data. I will not relitigate this controversy here. Instead, I want to explore what it means when experts suggest that the economy does not feel as if it is growing at 7.8 per cent. Usually, economists don’t have feelings but go by the evidence. Why have economists developed feelings? A walk down memory lane to the high-growth years under the UPA may help unravel this puzzle.
I was a bit perplexed by the Prime Minister taking to Instagram to congratulate the country on achieving 7.8 per cent growth. The figure is no mean achievement, especially if the fruits of growth are broadly shared. But 7.8 per cent growth is hardly unprecedented. Since 2004, on the government’s own data, India has grown at or above 7.8 per cent in 36 quarters, 22 of them under the UPA. I can’t imagine Manmohan Singh recording reels every time the economy grew fast. He would be exhausted!
If the economy is performing as strongly as the headline suggests, why are distinguished economists and policy experts raising questions about India’s economic data and the picture it paints of the real economy? What should we be feeling when the economy is genuinely doing well?
High economic growth should leave its imprint well beyond the national accounts. Joseph Stiglitz has long argued that GDP can rise even as many citizens feel worse off, which is why household incomes, consumption, and economic security matter. Put simply, when an economy is booming, people should find better jobs, see their real incomes rising, save and consume with greater confidence, while businesses invest because they expect demand to endure. These are not feelings in the abstract. They can be measured.
The government cites rising labour-force participation as evidence that employment is no longer a serious problem. In the years after the India Shining campaign, BJP leaders repeatedly cited surveys showing the creation of some 60 million jobs under the first NDA government. But much of that increase consisted of self-employment driven by rural distress, particularly women entering or returning to agriculture, because better alternatives were scarce. We know how that ended. Something similar is happening now. In 2025, Labour Minister Mansukh Mandaviya cited a 19 per cent increase in agricultural employment as evidence of the government’s jobs record. And the share of workers in agriculture has also risen in recent years. For a developing economy, that is a troubling reversal: Development normally means workers moving out of low-productivity farming, not back into it.
Real wages, especially in rural India, rose strongly during the high-growth years of the 2000s. But wage growth has been much weaker in the last decade even as corporate profitability has surged. The government’s own Economic Survey noted that corporate profits rose by more than 22 per cent in FY2023-24, while employment at the firms it examined increased by only around 1.5 per cent. When profits surge while wages and employment lag, growth will naturally feel different to households.
During the boom years from 2003-04 to 2007-08, net household financial savings averaged more than 11 per cent of GDP. By 2025-26, they had fallen to 6.2 per cent, a level last seen in the early 1980s. Household borrowing remains close to its historical peak. Nearly half of that borrowing now goes towards consumption, with only a third going towards asset creation and less than a fifth towards productive purposes. Borrowing alone does not indicate distress, but the combination of weakening financial savings and rising consumption borrowing is not what a broad-based boom should look like.
Consumption offers another clue. Two-wheeler and passenger-vehicle sales rose sharply in the April-June quarter. But a quarter’s data does not make a decadal trend. Two-wheelers, the entry point to middle-class mobility, grew at nearly 11 per cent a year in the decade before 2014. In the decade after, growth fell to under 2 per cent; even through 2025-26, it is barely above 3 per cent. Passenger vehicles slowed too, from roughly 11 per cent annual growth before 2014 to about 5 per cent since. Mass-market two-wheelers have lagged badly even as the passenger-vehicle market tilts towards more expensive utility vehicles. A K-shaped economy, anyone?
Finally, investment. The earlier boom saw the investment rate rise from roughly 27 per cent of GDP in 2003 to close to 39 per cent by 2008. Investment today remains well below the peak reached during the UPA era, though it has recovered to about 34 per cent of GDP. But who is doing the investing? Public capital expenditure has played a major role while private corporate investment has been far less exuberant than record profits might suggest. Net foreign direct investment, too, has been weak. If businesses saw a durable demand boom ahead, one would expect considerably greater urgency in adding capacity.
None of this means 7.8 per cent is fiction. It might be exactly right. What I am asking for is not a lower number, but a different kind of proof. Show me private investment rising on its own, not propped up by government spending. Show me real wages climbing the way they did in the boom years, instead of profits alone setting records. Show me two-wheeler sales closing the gap with their old growth rate, not coasting on one good quarter. Show me the workforce moving off farms again, not drifting back onto them. If these indicators begin turning around, that would tell me growth is reaching people, not just the national accounts. Until then, I will do what any evidence-minded citizen should: Withhold the applause and wait for the numbers that would actually change my mind.
Soz is an author, economist and member of the Indian National Congress
High economic growth should leave its imprint well beyond the national accounts.(Representative image). 
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