⤴ What's the potential for India's economic acceleration?

On track to be consistently the planet's fastest-growing large economy, the economy could do even better over the next decade

A brief movie moment, but an intriguing one: In the 2014 science-fiction film Interstellar — one of the all-time Up Wing-advocating movies — astronaut-turned-farmer Cooper (Matthew McConaughey) chases down a solar-powered Indian Air Force surveillance drone flying over mid-21st century Colorado corn fields. It’s a sequence that has generated considerable online speculation over the years, especially because the back story of this near-future Earth is left murky by director Christopher Nolan. All we really know is a) some mysterious blight is killing all plant life across the planet, and b) the US has become a neo-Luddite nation abandoning or otherwise incapable of maintaining advanced technology such as space flight and MRI machines.

But India seems to, at least at one point, have been a leading technological power able to fly spy drones across the US, some 10,000 miles away from “Delhi mission control.”

For the Interstellar reality of an Indian tech superpower to come true, India is a country that needs to maintain rapid economic growth driven by rapid productivity growth and innovation. The country just celebrated the 75th anniversary of its independence from British colonial rule, an occasion that Goldman Sachs marked with a big analysis report about India’s economic potential — and what it needs to do to reach that potential.

First, some background of the Indian economy since independence. There have been two major phases of economic growth. Between 1947 and 1980 was the economy’s “slow growth” period, according to GS, with real GDP growth ranging a bit below 3 percent annually by decade to a bit above 4 percent. GS: “Post-independence in 1947, India initially followed state-run and inward-looking policies that shackled the economy through regulations and severely restricted trade. The result was three decades of low growth.” The growth model chosen by India was the Soviet Union’s with its focus on heavy industrialization.