Nithin Kamath, the founder and CEO of Zerodha, recently reflected on India’s achievement as the world’s fourth-largest economy, calling it an impressive milestone given the many challenges the country faces. However, he cautioned that simply comparing GDP figures doesn’t provide the complete picture of India’s economic health or future prospects.
Kamath pointed out that key metrics such as worker productivity, labor force participation, and especially research and development (R&D) spending reveal significant gaps. He highlighted that India invests just 0.7% of its GDP in R&D, which is far below China’s 2.4%, South Korea’s 4.8%, and Israel’s 6%. This underinvestment in R&D signals a challenge in fostering innovation and sustaining growth.
Looking ahead, Kamath warned that as the world becomes more fragmented and technologies like artificial intelligence reshape industries, India cannot rely on its traditional growth strategies. To remain competitive and capitalize on its large and young population — its demographic dividend — he stressed the urgent need for collaboration between the government and private sector to improve education, promote research, and reform regulations.
Without building an ecosystem that nurtures education and innovation, Kamath believes India risks losing its brightest minds to opportunities abroad, which would limit its ability to achieve higher growth rates and fully realize its potential. He acknowledged these changes are complex and require sustained long-term effort but insisted they are essential for India to thrive in a rapidly evolving global economy.
In summary, Kamath’s message is that while reaching the fourth-largest economy status is noteworthy, India must invest deeply in R&D, education, and systemic reforms to truly unlock its future growth and remain competitive amid technological and geopolitical shifts. Without such transformation, India will struggle to sustain its growth trajectory and harness the full benefits of its demographic advantage.
