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The 3-I strategy may facilitate India to become Viksit.
In brief
- In 2025, EMDE group is estimated to account for 61% of global GDP vis-à-vis 39% for AEs.
- India’s contribution to global GDP growth has nearly doubled from 9.0% in 2010 to 17.5% in 2025.
- Thrust on domestic investment and innovation may facilitate India’s transition beyond the middle-income threshold as it progresses towards a Viksit status.
Share of EMDEs in global economy: History and prospects
From a near-equal share of Advanced Economies (AEs) and Emerging Market and Developing Economies (EMDEs) in global GDP during 2006-10, measured in constant 2021 PPP$ terms, the balance has now changed in favor of EMDEs that account for 60.9% of the global economy in 2025, a rise of nearly 11% points1 (Table 1). Correspondingly, the share of AEs has fallen to 39%. Within the emerging economies group, the maximum increase of 21.6% points is for emerging and developing Asia (EMDA) while there is a marginal fall for emerging and developing Europe and Latin America and the Caribbean. Considering major countries, China’s share at 19.7% and India’s at 8.5% in 2025 show an increase of about 1% point and 1.2% points from their 2021 levels, respectively.
Contribution to global GDP growth: Role of India and EMDEs
In terms of growth profiles, in 2025 (FY26 for India), India shows the highest growth among major economies at 6.6% followed by Indonesia at 4.9% and China at 4.8% (Table 2). EMDA shows a growth of 4.6%, far exceeding the growth of the AEs at 1.6%. Thus, the EMDA group leads global growth with India playing a key role.
In terms of contribution to global growth, China is assessed to make the largest contribution at 29.8% followed by India at 17.5% in 2025 (FY26 for India). As a group, AEs are estimated to contribute only 20.3% while the remaining contribution of 79.7% is estimated to come from EMDEs, within which EMDA has a dominant share. It is notable that the recent period is marked by India’s rising contribution to global GDP growth.
The contrast between share in economy and per-capita GDP (PPP$)
Despite a larger share of the world GDP and a larger contribution to world GDP growth, the per-capita GDP of the EMDEs is below that of the AEs. In 2025, it was PPP$15,901, nearly one-fourth of the per-capita GDP of the AE group at PPP$63,232 (Chart 1). At the country level, the US had the highest per-capita GDP at PPP$76,842 as compared to PPP$25,035 for China (about one-third of the US) and PPP$10,378 for India. India’s per-capita GDP increased by a multiple of 2.3 in 2025 as compared to the average for 2006-10 (PPP$4,550).
Shifting center of gravity of the world economy
Table 3 shows a continued global economic shift in the center of gravity away from the G7 group excluding Japan, towards EMDA including Japan and South Korea. By 2030, EMDA is projected to account for 42.3% of global GDP measured in constant 2021 PPP$ terms. Given the current rate of annual changes, in another decade or so, this group is likely to account for half of the global GDP. Further, India is projected to have a lower median age compared to that in key countries in the EMDA group (except Indonesia) and Japan and Korea in the next few decades.
Growth strategy for a Viksit Bharat
As per the country classification of a World Bank report2 (2024), India is presently placed in the lower middle-income group. It is likely to transition to the upper middle-income group in the next few years. As such, it needs to put in place policies that enable its successful transitioning from middle income levels closer to a Viksit status in the next two to two-and-a-half decades.
The report recommends a ‘3-I’ strategy for this purpose: a focus on ‘investment’, then ‘infusion’ of new technology from around the world, followed by in-country ‘innovation’. In this context, India may endeavor to increase its real investment rate to at least 35% from its current levels in the range of 33.4% to 33.7%. It is adept in adopting new technology from around the world. However, a more aggressive technology adoption, especially that of AI and Gen-AI both by the public and private sectors, may facilitate transition beyond the middle-income threshold as India heads towards a developed status. It is the thrust on domestic innovation which needs greater emphasis and requires additional resources for R&D and innovation both by the private and public sectors. Public sector infrastructure that facilitates innovation by individuals and industries also needs to be emphasized. In this context, it is heartening to note that the GoI, on 4 November 2025, launched a Research Development and Innovation (RDI) scheme with a corpus of INR1 lakh crore3. The PLI scheme which already covers 14 sectors may be expanded to cover advanced technology sectors like space and robotics.
Changing contours of the global economy
The economic growth drivers are likely to change in future, affecting growth potential and performance of different countries in significant ways. While there may be several countries with the demographic advantage of a large and young population, there may also be another set of countries whose population accounts for a smaller share of global population and is relatively older. Growth in the latter group of countries may be led by advanced and new technologies including AI and GenAI. Further, in these countries, capital may be abundant while labor may be abundant in the first set of countries. Regulated migration from one group to another might augment global growth and may prove to be ‘welfare improving’ compared to these groups finding solutions in isolation. Since new technologies are by nature labor-saving, there may be unemployment problems across the world. The technology-led countries may need adequately trained manpower and their aged populations may not suit their requirements. The labor abundant countries may also require to suitably educate and train their populations to absorb the new technologies, which may be developed within the country or inducted from abroad.
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Summary
Critical elements in India’s economic growth strategy going forward could include development of human resources through education, skilling and training supplemented by a robust employment augmentation strategy, maintaining a real investment rate at 35% of GDP or above, a fast pace of technology adoption and productive integration with high income, labor scarce countries. This is likely to help India transition to a developed status in the next two to two-and-a-half decades.
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