China escaped middle income trap but India still stuck in it; 4 economists debate if 6.5% growth is enough for Viksit Bharat

India's headline GDP growth looks enviable on a global chart. But is it durable enough to actually make Indians richer? That was the central question Deepak Ajwani, Editor, ET Digital, put to four leading economists at the ET Alpha Wealth Summit, and the answers ranged from cautiously hopeful to quietly alarming.

The panel included Garima Kapoor of Elara Securities, Dr Aurodeep Nandi of Nomura, Sakshi Gupta of HDFC Bank, and Dharmakirti Joshi of CRISIL. None of them pulled punches.

The consensus: 6.5% is real, but it is not enough

All four economists broadly agreed that India's sustainable growth rate sits at 6.5% to 7%. Joshi called it "not a bad rate of growth" and pointed to three decades of 6.2% average annual growth as proof that compounding works even at this pace.


But Kapoor drew the harder line: "If you want to achieve Viksit Bharat (Developed India), this growth will take you nowhere close to that. We need a minimum of 7.5% to 8% in real terms, durably."

The gap between 6.5% and 8% is not just a number. At 6.5%, India improves. At 8%, India transforms.

The middle income trap nobody wants to talk about

Dr Nandi delivered the panel's most striking data point. India's per capita income today stands at roughly $2,500 to $2,600. Thirty years ago, it was at similar levels to China. Today, China's per capita income is around $14,000, on the verge of escaping the middle income trap entirely.

"We were a lower middle income country 30 years back. We continue to remain a lower middle income country now," he said.

The implication for people is direct: Aggregate GDP growth that does not raise per capita income, does not generate domestic demand, does not create quality jobs, and does not build household wealth. India's growth story, at its current composition, risks spinning output without lifting incomes.

Private capex: The engine that has not started

The single biggest structural missing piece, all four panellists agreed, is private corporate investment. India's corporates are sitting on their strongest balance sheets in years, debt-to-equity ratios at 0.45, more credit rating upgrades than downgrades, and still not investing decisively.

Joshi's diagnosis was blunt: "There is ability to invest but not much willingness."

The reasons stack up. Post-pandemic uncertainty has made boardrooms cautious. China's industrial overcapacity is flooding Asian markets with cheap steel, cement, and solar panels, making new Indian capacity look unviable. The bankruptcy code has made promoters wary of leveraging up. And crucially, as Nandi pointed out, two major economic experiments have quietly failed, the corporate tax cut of 2019 did not trigger investment, and years of aggressive public infrastructure spending has not crowded in private capital the way textbook economics promised.

The one bright exception: New-economy sectors. Data centres, EVs, and renewable energy are seeing genuine private commitment. Joshi estimated that private capex in new sectors will grow from 12% to 25% of total industrial investment in five years. But these are capital-intensive sectors that do not absorb large numbers of workers, which circles back to the income and demand problem.

Why foreign money is leaving, and when it might return

On a single day last week, FIIs pulled ₹21,000 crore out of Indian markets. The panel dissected why.

Three forces are at work simultaneously. US 10-year yields at 4.5% offer risk-free returns that make the complexity of investing in India harder to justify. The global AI investment frenzy is drawing capital toward markets with a clear semiconductor or frontier model story — and India, for now, is positioned mainly as an adopter, not a creator. And China's narrative has quietly flipped: after years of capital rotating away from China toward India, that trade has partially reversed.

Nandi landed the structural point: "At the core of the reason it is the lack of R&D. That has always been there in India, and it has to rapidly change."

Gupta, the most optimistic voice on flows, argued that a lot of negative news is already priced in, and that a resolution in West Asia could be the catalyst that brings money back.

The durability scorecard

When asked to rate India's growth durability on a scale of 1 to 10, the panel scored it between 6 and 7 today, with upside contingent on execution, not assumption.

Kapoor's closing answer to what would make India's growth story significantly stronger was three words: "We get our execution right."

For investors, the takeaway is equally sharp. India's long-term story is intact. But the near-term is complicated by weak earnings growth, an absent private capex cycle, and a consumer that is more price-sensitive than the headline consumption data suggests. Gupta flagged the consumer sector specifically as one where investors may be too optimistic — and where inflation and monetary policy could deliver an unpleasant surprise.

The India century is real. Whether this decade belongs to it depends on decisions being made right now; in boardrooms, in budget offices, and in R&D labs that are still largely empty.