How to put boosters under India’s economy

Land in anyGDP Indian city, such as Bangalore or Hyderabad, and you will be struck by its heady optimism. India’s economy may be in the early stage of a historic boom. Recently released figures show that economic growth roared to an annualised pace of 7.6% in the third quarter of 2023. In the past few weeks four international forecasters have raised their growth projections for the year, from an average of 5.9% to one of 6.5%. The National Stock Exchange of India is now neck-and-neck with Hong Kong’s stock exchange for the title of the world’s seventh-largest bourse.Pause for breath, though, and India’s performance looks a little less impressive. growth has been slightly slower under Narendra Modi, India’s prime minister, who was elected in 2014, than in the decade before. Labour-force participation is a paltry 40-50%, and only 10-24% for women. Subsidies are distorting the economy. A semiconductor plant in Gujarat will create 5,000 jobs directly and 15,000 indirectly. But a state handout covered 70% of its $2.7bn cost. Assuming rather generously that the factory would not have been built without government support, each job cost $100,000—nearly 40 times India’s average income per person.