Now, this is a problem. At this rate of change, we are going to take approximately seven years to gain one percentile point. That’s assuming everybody else is also torpid. It is simply not good enough.
There are two core issues holding India back in so far as a sharper ascent is concerned: A very low change in per capita GDP percentile ranking over 35 years, and external vulnerability.
Any rational analysis of India’s percentile upward drift since 1991 leads us to one simple conclusion: Liberalisation failed to actually liberalise Indians from their inward-looking bias. Indian companies have remained centred around domestic markets and have done very little on the export front, which is exactly why we remain beholden to the vagaries of global capital flows.
Our most recent foreign exchange crisis has again shown that we have travelled little in 35 years towards bullet-proofing our economy. On External Resilience, we were at a percentile rank of 45 in 1991. In 2024, we are at 42.
Because we run persistent current account deficits, our reserves remain largely “rented reserves”, as opposed to current account surplus nations. Our poor quality reserves are stark proof of how our reforms simply led even more to domestic consumption boosts, rather than global competitiveness.
Our major corporations are run by the mercantile classes who have simply exploited the domestic consumer. This relentless focus has created a very “stock marketified” culture.
Chasing market capitalisation and creating family offices are the dominant fruits of liberalisation for India Inc. Pharma, solar, electric vehicles, chemicals, and consumer electronics are all significant industries. All of them rely on imports to fund domestic businesses.
Here’s what’s printed in large letters on the elephant in the room: How many of these large companies have used liberalisation to take India global?
Net exports remain key if we are to magnify the relative growth in our Composite Ranking. Additionally, our deficit on this front is a large deadweight on our GDP growth. It also keeps us permanently in fear of rising oil prices and capital flows, much like Yuvraj Singh expected a bouncer every ball he faced in a test match.
Thirty-five years after opening India up to the world, we are still told that we should be frugal in consuming dollars. No country where such things happen can ever get invited to the heavy-hitters’ table. A hedge fund titan that gets regular margin calls is no hedge fund titan.
If and when we get rid of the 1950s to 1990s adjective “precious” before foreign exchange, we will see our composite percentile ranking improve at a sprint, rather than at the languid evening schlep speed of a family around a Delhi colony park.
Based on this analysis, it is crystal clear that the government should be laser-focused on driving net exports.
No other economic parameter matters as much. GDP growth itself will levitate if we move net exports to surplus and higher. Our other failing rank — per capita GDP — will also move up as a consequence.
One more important observation: India’s Composite Index has done nothing extraordinary or away from trend in the last decade, despite aggressive policy intentions.
There are worrying aspects: The rate of Net Improvement has decelerated.
1991–2014: Delivered nearly all of the index’s net structural gains, rising from 54 at the start of liberalisation to around 60 by 2014 (a gain of six points over 23 years, or about 0.26 points a year).
2014–2024: The laboured climb has slowed further, moving from around 60 in 2014 to 61 in 2024 (one point over 10 years, or around 0.10 points a year).
Relative to the 33-year overall baseline slope (+0.15 pts/year), the post-2014 net pace is roughly one-third slower. Worryingly, it has now dipped solidly under the Plimsoll Line of its trend.
For those inclined to know the fine-print, I now expand on the individual factors. However, the section above pretty much answers the question: How far have we travelled since 1991, relative to the world?
AppendixPercentile trend analysis of factors used
Economic Scale: 1. Nominal GDP: Tracks India’s current dollar output in global percentile rank and world share. India’s global percentile advanced from 91 in 1991 to 98 by 2024. Its share of global nominal GDP nearly tripled from 1 per cent in 1991 to 3 per cent in 2024. It saw brief plateaus around the 1997 Asian crisis and the 2008 global financial crisis. Overall, pretty good.
2. GDP-PPP: Measures purchasing-power-adjusted output to reflect domestic price advantages. Maintained an exceptionally high global percentile, rising from 96 in 1991 to 99 in 2024. More than doubled its share of global PPP output from 3 per cent to 8 per cent. Showed virtually uninterrupted annual expansion across the entire three-decade period. This highlights India’s position as the world’s third-largest macro economy in purchasing power.
Economic prosperity: 1. Nominal GDP per capita: Measures average per-person nominal dollar output relative to the rest of the world. Rose from a modest 10th percentile in 1991 to the 22nd percentile in 2024. It reached an intermediate peak in 2010 (20) before stagnating for nearly a decade. Surpassed the 22nd percentile decisively only after post-2020 economic momentum. Demonstrates persistent per capita catch-up challenges despite rapid headline growth.
2. GDP per capita-PPP: Assesses real purchasing power per person relative to the global distribution. Improved significantly from the 16th percentile in 1991 to the 31st percentile in 2024. It outperformed nominal per capita metrics due to lower domestic price levels. India experienced steady gains from 2002 to 2010 before plateauing between 2011 and 2017. This reflects meaningful but ongoing improvement in domestic living standards.
Productive capability: 1. Merchandise exports: Evaluates cross-border physical goods shipments in ranking and global market share. India’s percentile rank increased from 82 in 1991 to 92 in 2024. Its share of world merchandise exports expanded from 1 per cent to 2 per cent over the period. Export share reached a peak of 2 per cent in 2022 after rapid gains in the 2000s. This shows solid integration into world goods trade, though growth has moderated since 2011.
2. Goods and services exports: Tracks India’s performance in international service deliveries, notably information technology (IT) and business process outsourcing (BPO). Percentile standing climbed from 78 in 1991 to 94 by 2024. India’s global service market share grew more than fivefold, from 0.5 per cent to 3 per cent. It surpassed merchandise exports in relative global market penetration.
This validates services as India’s primary structural engine of modern trade competitiveness.
3. Export of goods and services as a percentage of GDP: Captures the trade openness and export orientation of the domestic economy. Global percentile rose from 8 in 1991 to 25 by 2024. India peaked at the 29th percentile in 2013 before undergoing a multi-year slump. It rebounded sharply following pandemic-era trade recalibrations after 2020.
However, today, India ranks at the 25th percentile. That is where the nub of our problem lies. We have slipped from around the 29th percentile rank achieved in 2013.
This remains the overhang on India’s climb towards the more rarefied echelons of the 90th percentile on the ICI. It also underscores that domestic demand continues to drive the dominant share of GDP growth.
4. Commercial Services Exports: Focuses on specialised cross-border knowledge services, software, and finance. India rose into the top global tier, hovering around the 97th percentile by 2024. Its share of world commercial service exports surged from 1 per cent in 1996 to 4 per cent in 2024. This is one of India’s strongest international market share indicators.
6. Manufactured-goods exports: Tracks global percentile and world share for factory-made physical products. India rose from the 86th percentile in 1991 to the 95th percentile in 2024. Its global market share rose from 1 per cent in 1991 to nearly 2 per cent in 2024. The country displayed steady, consistent gains across the 2000s with resilient post-2020 growth, reflecting a gradually expanding industrial base, though smaller than peer Asian manufacturing hubs.
7. Engineering exports: Measures industrial machinery, capital goods, and transport equipment outbound shipments. Percentile rank increased from 81 in 1991 to 92 by 2024. Global export share climbed nearly tenfold from 0.1 per cent to 1 per cent. There was rapid growth between 2004 and 2012, signalling a structural transition toward higher-value industrial exports.
8. Pharma exports: Tracks India’s global presence in pharmaceuticals, bulk drugs, and generic medications. Maintained high standing throughout, moving from the 91st percentile to 96th in 2024. India’s world market share rose from 1 per cent in 1991 to a peak of 3 per cent around 2013–2014.
This demonstrates one of the earliest and most resilient mature manufacturing competencies.
9. Harvard Economic Complexity Index: Assesses the diversity and knowledge intensity of India’s export basket. The country’s percentile rank advanced from 59 in 1995 to 69 in 2024. It peaked at around the 69th percentile in 2022, but has stagnated near that level for years. This needs to be worked on aggressively to move India up the composite ranking.
10. Total factor productivity level: Measures the efficiency with which capital and labour inputs are utilised. Percentile rank improved from a negligible 5 in 1991 to 17 by 2023.
However, this percentile ranking is depressing. It remains abysmal in absolute global terms, highlighting technology and operational efficiency as primary structural bottlenecks.
External Resilience: 1. Energy imports, net (% of domestic energy use): Captures net energy import dependency relative to total domestic consumption. Net energy imports (per cent of total domestic energy use) increased threefold from 12 per cent in 1991 to 36 per cent by 2023. Peaked at 39 per cent of energy use in 2019 alongside heavy industrialisation. Global percentile rank rose into the 60s before dropping to 44 in 2023. (Lower the better)
2. Fuel Imports (% of merchandise imports): Tracks fuel and crude oil purchases as a share of total goods imports (lower the better). India’s percentile rank remained consistently near the very top of the world (94 to 100). Fuel made up 30 per cent of goods imports in 1991, peaking near 40 per cent in 2013, and finished at 32 per cent of merchandise imports in 2024, hovering at the 95th percentile. This represents India’s most severe recurring pressure point on foreign exchange balances.
3. Current account balance (% of GDP): Reflects external trade and financial balances relative to national economic size. India oscillated predominantly in deficit, ranging from a deficit of 1 per cent to 5 per cent of GDP. Global percentile fluctuated between 41 (in the 2012 oil shock) and 74 (1997). The 2024 percentile rank of 53 offers no comfort. This remains a major barrier to India’s stability and growth on the Composite Index.
4. Total Reserves (in months of imports): Measures foreign exchange reserve buffers against external import payment obligations. India stood at the 85th percentile in 2024. The country looks comfortable, but remember that these reserves are largely rented reserves, not “earned reserves”, and therefore represent a permanent vulnerability.
5. Foreign direct investment, net inflows (% of GDP): Assesses India’s ability to attract long-term FDI relative to GDP. Stood at zero in 1991, rising to multi-year peaks above 4 per cent between 2006 and 2010. Displayed sharp volatility, recording extreme percentile drops in 1998, 2008, 2011, and 2022. Dropped sharply to zero (15th percentile) in 2024. This demonstrates high sensitivity to global liquidity cycles and corporate repatriation patterns.
6. Short-term debt (% of total reserves): Evaluates liquidity risk by comparing short-term external debt due against forex reserves (the lower the better). Improved dramatically from a perilous 93 per cent of reserves in 1991 down to 5 per cent in 2004. Percentile rank fell from 56 (1991) to under 15 in the early 2000s (lower is safer). Stood at 43rd percentile in 2024. Remains a drag on a higher percentile ranking for India overall on the Composite Index.
Data Sources The India Composite Index is built from 20 indicators, each converted to a global percentile rank. Three sources supply them.
World Bank — World Development Indicators (data.worldbank.org) — 15 indicators
NOTE: Coverage is 1991–2024 throughout. The Economic Complexity Index begins in 1995 and Total Factor Productivity ends in 2023; both gaps are handled in the model’s imputation step. Four series are inverted once before use because a lower reading is the better outcome: Energy imports, fuel imports, short-term debt as a share of reserves, and exchange-rate depreciation. After that adjustment a higher percentile means a better result for every indicator in the index.
Dimension composition: Economic Scale draws on two WDI series; Economic Prosperity on two WDI series; Productive Capability on four WDI, four Harvard Dataverse and one Penn World Table series; External Resilience on seven WDI series. Each dimension carries an equal 25 per cent weight in the composite.
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