India has several growth engines

Ask what is powering the strongest parts of the global economy in 2026, and you keep getting the same answer. 

 

In America, it is AI capital expenditure. Investment in computers, data centres and networking infrastructure reached about 1.5 per cent of gross domestic product (GDP) in the first quarter of 2026, up sharply from a year earlier. The AI-related portion alone is estimated at about 0.8 per cent of GDP. In that quarter, investment in computer equipment and software contributed more than half of GDP growth.

 

At points last year, some economists reckoned that AI-related investment was adding more to American growth than all consumer spending combined. In Taiwan, the same cycle wears a different jersey. The official forecast now puts its 2026 growth above 11 per cent, the fastest in nearly four decades, propelled by AI-related exports and the investment that feeds them. In South Korea, the state think-tank KDI raised its 2026 forecast from 2.5 to 3.2 per cent, with semiconductors accounting for nearly all of the upgrade. Chips now make up more than two-fifths of Korean exports.

 

In the same breath, KDI cut its employment forecast. Income gains, it noted, remain concentrated in semiconductors, a sector whose boom produces surprisingly few jobs. Its economists warn that swings in a single product cycle can materially alter the country’s broader macroeconomic outlook. It is, increasingly, a form of one-legged growth. Japan, slower and older, is edging onto the same track, with AI and data-centre demand among the leading forces behind a planned 19.7 per cent jump in large-company capital spending in FY26. And the economies not on this engine are mostly not flying. The euro area is expected to grow by around 1 per cent or less in 2026, with Germany barely growing after years of stagnation. China will post something near 4.6 per cent, respectable on paper, but it is a lopsided machine: A record goods trade surplus last year, stacked on top of a property market in which the sales floor area is now roughly half its 2021 level and new construction starts are down by around three-quarters, alongside persistent deflationary pressure and weak domestic demand.

 

So the world sorts, roughly, into three boxes. Fast growth riding the AI trade. Slow growth riding nothing much. And China, half in and half out, benefiting from an export-heavy industrial machine while its own property market and domestic demand remain weak. Markets say it more bluntly still. Goldman Sachs puts AI-linked companies at roughly 45 per cent of the S&P 500’s market value, up from about 25 per cent when ChatGPT launched. Across global markets, semiconductor, power and tech-infrastructure stocks have hitched themselves to the same capital-spending cycle. None of this necessarily means the trade is a bubble. Unlike much of the speculative excess of 2000, today's largest AI beneficiaries are highly profitable. But the real fuel in a single engine is still a single engine. The plane flies beautifully until that one thing coughs.

 

Now look at India’s just-released national accounts for April to June. Real GDP grew 7.8 per cent. A good number. But the larger point is the table underneath it. Manufacturing grew 9.2 per cent, construction 7.7 per cent, electricity and utilities 8.9 per cent, financial services, real estate and IT 12.1 per cent; trade, hotels and transport 8.5 per cent, public administration and other services 7.5 per cent. Agriculture did its steady 3.6 per cent, and only mining contracted. Six of eight major sectors grew at or above 7.5 per cent, and the strength ran across manufacturing, construction and several large service categories. 

 

The investment data is also telling. Fixed capital formation rose 11.9 per cent in real terms, roughly double last year's pace. Its share of nominal GDP also rose to 34.3 per cent. What is being built? Not one thing. The indicator annexure reads like an inventory of an economy in motion: commercial vehicle sales up 18 per cent, three-wheelers up 30 per cent, electrical equipment output up 27 per cent, capital goods up 15 per cent, machinery imports up 51 per cent, with cement, steel and railway passenger traffic climbing. Beyond those indicators sit data centres, India’s first large semiconductor projects, a genuine technology sector, defence production, renewables, pharmaceuticals, aviation and digital commerce.  

 

It can be argued that many engines may still be weaker than one extraordinary engine. If AI delivers the productivity revolution its spenders are betting on, America’s concentration will look like conviction, and diversification will look like a failure to pick the winner. Perhaps. But the wager has two parts, and only one is about whether AI works. The other is how much AI the world needs, and at what price. Productivity gains may well arrive and still fall short of justifying either the volume of computing being built or the valuations attached to it. A striking share of the world’s growth and market value now rests on both parts: America through capex, Taiwan and Korea through exports, Japan through equipment and materials, US equities through nearly half the benchmark. When one bet absorbs this much, the question of interest is what remains standing if it disappoints. 

 

India’s growth is difficult to narrate because it has no single protagonist. Just a wide, unglamorous table in which almost every row is growing. For the moment, one large economy is displaying something genuinely scarce: Growth that does not depend on any single indispensable thing going right.

 

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The writer is an economist and associate professor at SPJIMR. Views are personal.