Poor countries develop by being able to concentrate their resources. This almost always requires the use of the demographic dividend.
The demographic dividend is where healthcare measures cause infant mortality to plummet but the dominant culture hasn't adjusted to the new reality of not needing to give birth to as many kids. This results in a huge youth cohort whom are ready to work and don't need any pension etc. The resulting effect is the government having increased taxable revenues while social expenditures remain low. This demographic dividend disappears over time as people get adjusted to having less kids. While the dividend is active, governments need to invest wisely to move their economy up the value chain.
This means investments into infrastructure, manufacturing, r&d, and so on.
India's infrastructure, manufacturing, and r&d spending are all abysmal even compared to 1990s China. For example China was spending around 1% of GDP on R&D then and still constantly increasing. India has been at 0.5-0.6% for several decades now and with basically no change. India's infrastructure is constantly over-promised and under-built. The difference is manufacturing is also stark.
India still faces constant major civil unrest to this day. Not the "unrest" that media talks about with China, but actual violent revolts with soldiers constantly sent into provinces to impose martial law. Just earlier this year (or 2021?) they sent soldiers into Kashmir and put the province into lockdown with no telecommunications allowed.
At the same time, India's youth cohort has just been idling away. India's labor force participation rate is only 23.7%. That's an incredible amount of young men with no jobs or income - the exact sort of group responsible for nearly all state-ending revolts. For comparison China was at 78% participation rate in the 1990s. And this joblessness has further repercussions down the line - they aren't gaining any work experience or skills in the meantime. Unemployment rate is also significantly higher than China in the 1990s or since.
Now if India was still reaping the dividend, that would just be disappointing but not damning. However, India's TFR is already at 2.0-2.1, which is replacement rate. That means India's demographic dividend is already over. This is already their last generation to benefit.
What other low-hanging fruits do they have?
India's urbanization rate is 35.4% compared to 1990s China's 26.4%.
Their literacy rate is 74.4% which is about the same as China in 1990 (77%).
Their currency has already deprecated 4x against the USD since 1990s (21.5x since independence) and has never appreciated. There has never been a pause in their depreciation either. China maxed out at 4x in the 1990s and has since appreciated significantly and even during those times China's depreciation was always tempered with pauses in the devaluation.
Despite decades of effort, they still suffer from the same caste-based divisions in society. It's bad enough that even their immigrants to the US are frequently reported as making hiring decisions based on caste-signifiers such as name and hometown. Not to mention their persistent sex-based discrimination forcing women out of the labor force.
Even 5 years ago, India was still having major water scarcity problems in addition to lack of clean drinking water. Their cities were running out of groundwater. Only 33% of their population has access to clean drinking water and 200k people there die annually due to water shortages and water-borne diseases. This is stuff India itself acknowledges and has been trying to fix for decades. They were suggesting rainwater collections schemes and building additional desalination plants back then. Those problems haven't been fixed since.
Now tack on all the additional countervailing trends.
Climate change will exacerbate heatwaves across India. India already has pitiful power generation and widespread lack of ACs. That will further cause deaths and drops in productivity. In addition climate change will also cause the monsoon season in India to be wetter but significantly shorter, resulting in crops like rice only have 1 harvesting seasons as opposed to 2. That's a major crunch on their already lacking food production. +40% of Indian children are chronically undernourished and the overall population's dietary gap is about 20-30%. India has in total at least 200 million undernourished people. Existing aquifers will not be sufficiently replenished by shorter monsoons either. Their poverty rate is still +85% today, they won't be able to cope.
Robotics has been consistently displacing people from manufacturing for decades now, but only recently are robots starting to displace even cheap labor. Already the pie is shrinking such that pretty much only textiles are still out of reach. So the window of capital attraction via cheap leabor is already closing. This is before considering how much more competition there is from providers of cheap laborers. Africa is at the same spot as India right now, but with significantly better demographics. For example, Nigeria also has a significant and massively growing population whilst having the same GDPpc as India. Just compare Nigeria and India's population pyramids or other statistics.
Globalism is also no longer a given going forward. When world starts to actually decouple, it will start at the low-skill end since those will be the easiest to replace. That spells further doom to attempts to use manufacturing to jump-start their rise to middle-income economies.
There's more to be said, but no matter how you look at it, things don't look good for India's future at all. Perhaps they could tackle all these problems, but their track record leaves me pessimistic.
