India's milestone of clinching the title of the world's fourth-largest economy may have drawn applause but billionaire entrepreneur Nithin Kamath shared one important aspect where the country still "chronically" lags — low spending towards research and development.
"When you look at important metrics like productivity, labor force participation, and perhaps most importantly, R&D spending, we have a long way to go," the Zerodha co-founder said in a post on the social media platform X.
At the risk of "sounding like a spoilsport", Kamath said one of the biggest long-term challenges for Indian growth is this chronically low spending on R&D, pegged at just 0.7% of the GDP compared to China's 2.4%, South Korea's 4.8%, and Israel's 6%.
"To continue growing in an increasingly fragmented world and an uncertain future that might be shaped by AI, I'm not sure we can continue doing what we've done so far... To be clear, this is both a government problem and a private sector problem as data shows. It's unfair to expect the government alone to solve this," he said.
It's amazing that despite all the challenges, we're now the 4th largest economy in the world. Having said that, at the risk of sounding like a spoilsport, GDP comparisons only tell you so much.
When you look at important metrics like productivity, labor force participation, and… pic.twitter.com/SWUhltKEjaKamath said that unless India builds an ecosystem that invests in education and research, its best minds will leave the country for opportunities overseas and higher long-term growth rates will remain out of reach. "We'll also miss out on taking advantage of our demographic dividend. This isn't an easy fix."
The business leader highlighted the need for long-term efforts to transform education, streamline regulations, and create an environment with the right incentives for India's brightest minds to discover and build in India, for India. "Without this, we'll never truly realize our potential."
In a major milestone, India has become the world's fourth-largest economy, overtaking Asian economic powerhouse Japan, according to an update shared by BVR Subrahmanyam, the chief executive officer of the Centre's top-most think tank NITI Aayog.
"We are the fourth largest economy as I speak. We are a $4 trillion economy as I speak," he said, while briefing reporters following the 10th Governing Council meeting of NITI Aayog on Saturday.
India today is larger than Japan in terms of the economic size, he said, citing the International Monetary Fund data. The overall geopolitical and economic environment is favourable to India, Subrahmanyam added.
"It is only US, China, Germany, which are larger than India and if we stick to what is being planned and what is being thought through, in 2.5-3 years, we will be the third largest economy," he said.
The government will release the fourth quarter GDP data on Friday.
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