India’s economic trajectory is nothing short of extraordinary. The country has surged to become the world’s fourth-largest economy, boasting a $4.5 trillion market cap. Yet, in terms of per capita income, India ranks 149th, a stark indicator of its wealth divide. The Indus Valley Report 2025 unpacks these contradictions, revealing the underlying complexities of India’s rapid rise and the structural challenges that remain unresolved.
The Economic Paradox: Growth Without Equal Prosperity
India’s economic expansion is driven largely by consumption (56% of GDP) and services (54% of GDP). The booming public markets, startup culture, and digital revolution paint a picture of prosperity. But behind the numbers, a different reality unfolds. Economic growth is not evenly distributed, with wealth concentrated among a small segment of the population while vast sections of the workforce remain in precarious employment.
At just 3.2%, India’s unemployment rate appears low. However, this statistic masks the fact that only 22% of Indians have salaried jobs, and a mere 9% have formal contracts. The remaining workforce is largely informal, with 58% self-employed, many of whom work in conditions that do not guarantee stability, income security, or economic mobility.
A Booming Market, but for Whom?
India’s stock market is witnessing an unprecedented transformation, with retail investors now dominating public markets. The country has become the largest derivatives market in the world, surpassing the United States by nearly 20 times. This shift signals a deeper financialization of the economy, where individual investors—many from middle-class and upper-middle-class backgrounds—are reshaping India’s financial landscape.
At the same time, quick commerce has emerged as the fastest-growing industry segment in India. Since FY22, order values have grown 24 times, with consumers increasingly prioritizing speed and convenience over traditional retail experiences. The explosion of instant delivery services is changing consumption habits, reflecting a shift in how economic growth is being driven at the grassroots level.
India’s Three Economies: A Nation Within a Nation
India’s economy cannot be viewed as a single, cohesive entity. Instead, it operates as three distinct economic segments.
- India 1 (140 million people) drives most of the country’s consumption and tax revenue. If it were a separate nation, it would rank as the 10th largest economy in the world and qualify as a developed country.
- India 2 and 3, representing the rest of the population, exhibit much lower levels of economic participation.
Despite the strength of India 1, its growth is deepening rather than widening. While 75 million people file taxes, only 28 million actually pay them. This imbalance underscores the narrow tax base, raising concerns about the sustainability of India’s fiscal policies.
Startups, IPOs, and the Unicorn Illusion
India’s startup ecosystem continues to expand, but the numbers tell a more nuanced story. While 117 companies have claimed unicorn status, only 91 maintain billion-dollar valuations. The good news is that 19 unicorns are preparing for IPOs, a sign that the ecosystem is maturing and moving toward more sustainable growth.
Between 2021 and 2024, India experienced a wave of venture-backed IPOs, with 66% of them valued under $1 billion. Unlike previous cycles driven by hype, post-listing performances have been stronger, with IPOs gaining an average of 25% after launch. The shift toward smaller, more resilient companies going public suggests a new phase in India’s public market evolution, where investors are rewarding long-term business fundamentals over speculative valuations.
India’s AI Dilemma: Why No ‘DeepSeek’ Moment?
While China has made headlines with its AI breakthroughs—such as DeepSeek—India has yet to produce a globally recognized foundational AI model. Despite having a growing AI ecosystem and a thriving tech talent pool, India remains in the early stages of developing cutting-edge AI infrastructure. The reasons for this lag include limited R&D funding, a fragmented AI ecosystem, and an underdeveloped regulatory framework that discourages risk-taking. However, with recent enthusiasm in the AI sector, India may yet find its breakthrough moment.
What Comes Next?
India’s economic future is at an inflection point. The country’s market strength, retail revolution, and startup boom present enormous opportunities, but underlying inequalities, informal employment, and fiscal imbalances continue to pose significant challenges. The question is no longer about whether India will grow, but how that growth will be distributed and who will benefit from it.
In the coming days, Enlightened Post will further break down key insights from the Indus Valley Report 2025, exploring India’s tax burden problem, the true impact of the IPO boom, and why its AI sector is lagging behind global leaders. Stay ahead with us as we continue dissecting India’s most pressing economic realities.
