Growth Is Ok, But Challenge Is To Ensure It's Inclusive, Says Montek Singh Ahluwalia

“People have to be persuaded that this is a good reform, that it'll have the right effect, and you know, some people will have problems, but then you must be willing to listen to those problems,” Ahluwalia said. “A little bit of compromise to ensure that broader reforms are in place will be key,” he added.

India’s average growth rate of 6-6.5% is far below the desired number if the 2047 target is to be met. At present, public expenditure is driving investment.

“The present situation is such that any lawyer will tell you that if a businessman runs into a problem and the matter reaches the courts, you'll be lucky if it's resolved in 20 years,” Ahluwalia, who steered the Planning Commission during the UPA regime between July 2004 and May 2014, told The Secretariat.

“Public expenditure alone will not be able to drive growth,” he pointed out.

Earlier, an S&P Global report underlined that while India is on track to become the world’s third-largest economy by 2030, accelerating structural reforms will be key to unlocking private investment.

The present situation is such that any lawyer will tell you that if a businessman runs into a problem and the matter reaches the courts, you'll be lucky if it's resolved in 20 years

- Montek Singh Ahluwalia, former Deputy Chairman of the erstwhile Planning Commission

The government’s spending has been steadily increasing over the last few years. A decade ago, the government’s capital expenditure stood at ₹2.8 lakh crore. In 2026-27, the figure increased to ₹2.2 lakh crore.  

The Economic Survey 2025-26 highlighted that the government investment push has been driving the infrastructure upgradation in the country.

“The institutionalisation of integrated planning through PM GatiShakti, alongside reforms in financing, asset monetisation and public–private partnerships, has strengthened project preparation and execution while crowding-in private investment,” it said.

But the worry for policymakers continues as private sector investment remains stubbornly subdued.

“Public expenditure-led growth is unsustainable; the government needs private investment, and more needs to be done to push the private sector to make larger investments,” Ahluwalia said.

Amid the rising geopolitical and geoeconomic risks, India needs to bring in reforms at the earliest for businesses to be able to function. The most vulnerable will be the micro, small and medium enterprises.

India’s tax structure, though, has been significantly simplified, is considered one of the most complex in the world.  Despite several measures to reduce tax litigation, lakhs of appeals are still pending before the Commissioner of Income Tax Appeals (CIT-A).

Investment will be key for higher and inclusive growth, which in turn would help in generating employment.  

Inclusive Growth

A growth rate of at least 8% is necessary, the economist said, adding that economic growth must be inclusive. “Most people want regular jobs; it's something that the government should take at the top of its priority and see what it can do,” Ahluwalia said.

While the Atal Bihari Vajpayee government managed the economy well, its India Shining programme had failed to make growth inclusive. The widespread protests led by the CJP over the National Eligibility-cum-Entrance Test (NEET) paper leak may not have captured the true essence.

Lack of jobs and that may have been a deeper, that is a deeper concern, the economist said. “It may not have been articulated well, but to my mind, lack of jobs and employment opportunity was the underlying problem,” Ahluwalia said.