The time for growth is now

The driving forces of the country’s growth—including urbanization, a rising middle class, and increasing consumer spending—are ripe for companies to seize upon.

India stands to become one of the largest growth engines in the world, according to research in a new McKinsey Global Institute (MGI) report, India’s ascent: Five opportunities for growth and transformation. In this episode of the McKinsey Podcast, McKinsey senior partners Noshir Kaka and Alok Kshirsagar and MGI partner Anu Madgavkar talk with McKinsey’s Cecilia Ma Zecha about the way forward in a growth- and productivity-powered India.

Cecilia Ma Zecha: Hello and welcome to this edition of the McKinsey Podcast. I’m Cecilia Ma Zecha, an editor with McKinsey Publishing in Singapore. Twenty-five years ago, India embarked on a journey of economic liberalization, opening its doors to globalization and market forces. The IMF [International Monetary Fund] expects GDP to grow more than 7 percent this year, making India the world’s fastest-growing large economy. Powered by a rising middle class that’s expected to more than triple to 89 million households by 2025, India has an attractive long-term future and compares favorably with other emerging markets.

What’s the road ahead? Our guests today are Noshir Kaka, a senior partner in McKinsey’s Mumbai office, and Anu Madgavkar, a partner of the McKinsey Global Institute. They are the authors of a new MGI report on India’s ascent, which outlines five opportunities for India’s growth and transformation. Also joining us to look at the implications for domestic and multinational companies is Alok Kshirsagar, a senior partner and leader of McKinsey’s Asia Risk Practice. Welcome, everyone. Noshir, let me start with you. What is the road ahead for India’s economy?

Noshir Kaka: Thank you, Cecilia. First, as you outlined, we are in an exciting time for India and companies in India, both multinational as well as domestic. India’s going to be the third-largest incremental GDP growth engine for the planet by 2030. That’s significant if you think about India’s size relative to the other massive geographies out there, like China or the US.

What’s powering that growth is two or three things that are pretty unshakable. First is the trend toward urbanization, which is going to increase consumption power massively, as well as economic leverage. The demographic changes that India’s going to go through are, again, unshakable and undeniable. But I think powering those two or three things, along with changes in the way the government is functioning as well as changes in technology, are ensuring that this growth engine has several more cylinders than the few that we used to originally think about.