The much-awaited
Economic Survey 2026 is out, and it reads less like a routine pre-Budget document and more like a diagnosis of a world in flux. Against a backdrop of increasing geopolitical churn, fragmented supply chains and a weakening global order, the Survey has indicated the pressures India faces and the narrow window present for the country to convert uncertainty into strategic opportunity.
In that wider assessment, the Survey makes a pointed reference to India’s standing on the Power Gap Index, a first-of-its-kind reference. More directly, the Survey states, “The Australia-based Lowy Institute’s Power Gap Index suggests that India is operating below its full strategic potential. India’s power gap score is -4.0, the lowest in Asia, excluding Russia and North Korea. India has its work cut out.”
So, what exactly is this Power Gap Index that has found its way into the Survey, and why does it matter for policymakers?
What is the Power Gap Index and how does it work?
It is important to note that the Power Gap Index is not a standalone index like the Human Development Index or the Global Innovation Index. Rather, it is a secondary analytical measure derived from the Lowy Institute’s Asia Power Index, an annual ranking produced by the Australia-based Lowy Institute.
The Power Gap metric reveals the difference between a country’s expected influence, based on its resources, and its actual influence in the region.
In simpler terms, a positive Power Gap score means a country exerts more influence than its resources would predict, while a negative Power Gap score indicates underperformance. A positive number suggests effective conversion of resources into influence through diplomacy, alliances and economic statecraft. A negative gap highlights a disconnect, where a country possesses significant capabilities but is not leveraging them fully in geopolitics.
How the Power Gap Index is calculated
The Asia Power Index, and by extension the Power Gap Index, is built on eight thematic measures grouped into two broad dimensions, according to the Lowy Institute.
The resource-based measures include:
- Economic capability
- Military capability
- Resilience (internal stability and strategic posture)
- Future resources (long-term demographic and economic potential)
The influence-based measures include:
- Economic relationships
- Defence networks
- Diplomatic influence
- Cultural influence
Each category is constructed from sub-measures and roughly 131 individual indicators drawn from public sources and original Lowy Institute research. These are combined into a weighted score out of 100. The Power Gap is then derived by comparing this overall power score with an expected score based solely on a country’s resource base.
India’s rank and Power Gap score
In the Asia Power Index 2025, India is ranked third out of 27 countries and territories, with an overall score of 40.0 out of 100. This marks India’s entry into the “major power” category for the first time. The United States and China occupy the top two positions.
Despite this, India’s Power Gap score remains negative at -4.0, making it the lowest in Asia except for Russia and North Korea.
By contrast, several countries with smaller resource bases perform better on influence. Japan has a Power Gap score of 1.0, Australia scores 8.0, Singapore 5.2 and South Korea 5.1, indicating stronger conversion of resources into regional influence relative to India.
Why the Economic Survey says India is underperforming
The Economic Survey 2026 cites the Power Gap Index as evidence that India is operating below its full strategic potential. While India’s macroeconomic fundamentals are strong, the Survey notes that the country has not yet translated its economic size and growth into commensurate external influence, particularly in economic relationships and defence partnerships.
In effect, India’s capabilities are not fully reflected in its ability to shape regional strategic outcomes, a gap the Survey identifies as a key policy challenge.
“India has demonstrated strong resilience and absorptive capacity in the face of global shocks. The next phase of its development challenge is different: to move from being primarily a recipient of stability to becoming a source of stability and opportunity for others,” the Survey said.
 "What is the Power Gap Index the Economic Survey cites for the first time?")
