Most of these maintain the contrast between Trump’s provocative label and India’s actual economic trajectory. Let me know if you’d like a variation with a more scholarly or dramatic flair!On July 30, United States President Donald Trump once again ignited global headlines, this time by slapping a 25% tariff on Indian exports and threatening a vague yet pointed “penalty” for New Delhi’s continued purchases of military equipment and energy from Russia. A day later, in his signature bombastic style, Trump declared on social media that he didn’t care if India and Russia “take their dead economies down together.” The provocation was vintage Trump—caustic, performative, and calculated. Yet, despite the hyperbole, his words stirred an overdue conversation: What is the actual state of India’s economy? Is it really “dead,” or is this another instance of trade war theatre obscuring deeper truths?
Predictably, the rhetorical salvo triggered polarized reactions in India. Leader of Opposition Rahul Gandhi, known for his sharp critiques of the Modi government, was quick to endorse Trump’s claim. “Yes, he is right,” Gandhi said, adding, “The whole world knows that India is a dead economy and that the BJP has killed it.” On the other side of the aisle, Union Minister of Commerce and Industry Piyush Goyal mounted a vigorous defense in Parliament. “India has transformed from being one of the ‘fragile five’ to the fastest-growing major economy in the world,” Goyal asserted, noting that the nation has climbed from the 11th to the 5th largest global economy within a decade and now contributes 16% of global growth.
Both positions, though rooted in real anxieties or achievements, fall short of providing the nuance this debate requires. India is not a “dead” economy—far from it. But nor is it the gleaming growth engine that government statements often claim it to be. Rather, India is a complex paradox: a rapidly expanding economy weighed down by internal contradictions, institutional bottlenecks, and social fault lines that continue to stunt its long-term potential.
To evaluate Trump’s claim, one must begin with the most basic indicator of economic vitality—growth. A dead economy, by definition, lacks it. Data from the International Monetary Fund (IMF) stretching over the past three decades dispels the hyperbole. Since 1995, India has grown nearly twelvefold, making it one of the fastest-growing major economies globally, second only to China. In contrast, the United States economy has quadrupled in the same period, the UK has grown less than threefold, and Germany has not even doubled its 1995 size. Japan’s economy, tellingly, is smaller today than it was thirty years ago—a stagnation that starkly contradicts Trump’s characterization of his allies as thriving and rivals as “dead.”
Moreover, when measured relative to the United States, only three countries—China, India, and Russia—have increased their share of global economic weight. India, which was less than 5% the size of the US economy in 1995, now hovers around 14%. Meanwhile, America’s traditional allies—Germany, Japan, and the UK—have all shrunk in proportion. This shift underscores that India is not only alive but gaining ground in a changing world order.
Still, growth alone does not absolve India of its economic ailments. Since 2011-12, India has been unable to recapture the blistering 8-9% growth rates it enjoyed in the pre-2008 period. Instead, growth has slowed to a more modest 6% average since 2014. India’s GDP, which stood at \$2.1 trillion in 2014, is expected to reach \$4.1 trillion by the end of the 2025 fiscal year. While this doubling is significant, it pales in comparison to China’s turbocharged expansion in the mid-2000s—jumping from \$1.9 trillion to \$4.6 trillion in just four years.
The trade context that prompted Trump’s outburst also reveals India’s comparative weakness. India accounts for just 1.8% of global merchandise exports and 4.5% of global services exports—modest figures for a nation with over 1.4 billion people. This underperformance is in part due to a protectionist impulse that has often left India isolated in global trade forums. While other nations rapidly negotiated favorable terms with Trump to sidestep tariffs—Pakistan, Japan, and the EU among them—India remained locked in hard bargaining, unwilling or unable to make concessions on agricultural and industrial protectionism. The result was the imposition of steep tariffs and a sharp rebuke from Washington.
This inward-looking posture is symptomatic of deeper structural flaws. India’s rural economy remains in distress, with a majority of farmers still operating at subsistence levels. Rather than absorbing surplus rural labor, India’s manufacturing sector has underperformed. Data from the Ministry of Statistics reveal that since 2019-20, manufacturing has grown at a compound annual rate of just 4.04%, trailing even the agriculture sector at 4.72%. This is a troubling anomaly for a developing country where manufacturing is traditionally expected to lead the charge toward modernization.
The lopsided structure of growth has also produced rising inequality. Despite overall GDP expansion, the quality of that growth remains deeply skewed. Twenty-four percent of Indians still live below the World Bank’s poverty line, a marginal improvement over the 27% recorded in 2011-12. This is especially sobering given the size of India’s economic leap during the intervening years. Moreover, income and wealth inequality have grown more severe, with the top 1% of earners capturing a disproportionate share of new wealth.
On human development indicators, the picture is equally concerning. Health and education continue to underperform, particularly in rural areas. India ranks 132 out of 191 countries on the UN Human Development Index—a figure that belies its economic ranking. Meanwhile, unemployment remains a persistent challenge, especially for the educated. There is a stark skills mismatch in the labor market; even as educational attainment rises, job creation has not kept pace. Youth unemployment hovers near double digits, and female labor force participation remains among the lowest in the world. Even when women do enter the workforce, they are often relegated to poorly paid, low-quality informal jobs.
These systemic challenges are compounded by the political economy of reform. India’s reluctance to open key sectors to international competition stems not from bureaucratic inefficiency alone but from vested interests—be it politically powerful agrarian lobbies or industrial oligarchs with deep roots in the domestic economy. In No Trade is Free, former US Trade Representative Robert Lighthizer reveals how Trump’s administration identified India’s tycoons as key roadblocks to trade liberalization. Rather than bureaucrats, it was these entrenched economic elites who shaped Delhi’s combative negotiating stance. Their influence continues to hinder structural reforms needed to make India globally competitive.
In this context, Trump’s comments—however tactless—highlight a broader international perception that India must grapple with. The world is watching, and so far, India’s rise has been viewed with a mix of admiration and exasperation. Its demographic advantage, technological potential, and geo-strategic position make it a natural counterweight to China. Yet, its underwhelming participation in global value chains, reluctance to liberalize trade, and sluggish human development betray an economy still struggling to convert promise into performance.
However, the road ahead need not be one of defensive nationalism or inward retreat. India’s rise to the world’s fifth-largest economy has been hard-earned, but it must not become complacent. The next phase must involve courageous reforms: revitalizing the manufacturing sector, boosting investment in health and education, enabling female participation in the workforce, and modernizing trade policy to reflect ambition rather than anxiety. Global investors and trading partners are not asking for miracles, but they are watching for signals that India is ready to lead—not just survive.
As for Trump’s tariff war, history may yet show that it was less about India’s economic health and more about America’s evolving strategic calculus. Yet it serves as a stark reminder that in the ruthless theatre of global trade, perception can often trump data. It is now up to India to shape that perception through action.
The Indian economy, then, is anything but dead. It is very much alive—dynamic, erratic, and full of untapped potential. But without systemic course correction, it risks falling into a deeper malaise—not of stagnation, but of unfulfilled destiny. The choice is urgent, and the world is watching.
Dipak Kurmi
Tuesday, August 5, 2025