Over the past two decades, India has enjoyed unprecedented economic growth fueled by major domestic reforms. But corruption, limited resources, and fierce Chinese competition all threaten to cut short India’s boom. Four leading experts—Arvind Subramanian of the Peterson Institute and the Center for Global Development, Devesh Kapur of the University of Pennsylvania, and Vikram Nehru and Milan Vaishnav of the Carnegie Endowment—shared their views on the economic challenges facing New Delhi and how policymakers can overcome them to secure India’s future in the region. Carnegie’s Ashley J. Tellis moderated the conversation.

  • An Impressive History: Subramanian looked back at India’s economic turnaround, commending New Delhi’s move away from autarky and protectionism in favor of liberalizing reforms and a more globalized economy. These reforms have paid major dividends, he said: Indians have enjoyed an average per capita GDP growth rate of 7 percent since 2000. Major social transformations and reductions in poverty rates have accompanied this transformation, added Subramanian.

  • Too Much Too Fast? Subramanian cautioned that, despite these impressive achievements, India still lags far behind comparable economies—including China’s—in key indicators. He pointed out that India has developed its skilled labor capacity and begun exporting foreign direct investment far earlier in its developmental trajectory than most countries. This trend, he explained, has turned India into a service sector powerhouse, but left its unskilled labor force dramatically underutilized. Finally, Subramanian warned that government expenditures have skyrocketed in the last ten years, leading to double-digit inflation that has left India macro-economically vulnerable.

  • Expanding Education: Kapur argued that a more robust higher education infrastructure is the key to India’s long-term growth. Echoing Subramanian, he pointed out that India has few natural resources, but abundant human capital waiting to be developed. Despite massive increases in university enrollment, especially in applied fields such as engineering, Kapur emphasized that higher education in India needs to focus on quality and affordability, not just quantity. He explained that the proliferation of lower quality “degree mills” and a brain drain of top academics to the United States threaten to leave India’s universities without a capable corps of expert faculty. The future of Indian education, in Kapur’s view, lies in private universities, online education, and corporate campuses that provide on-the-job training.

  • Confronting Corruption: Vaishnav expanded on the traditional narrative about corruption in India, explaining that while it is indeed endemic and requires serious attention, it can also reflect or prompt some positive changes. He pointed out that increased rent-seeking from corrupt officials is in some ways an inevitable side effect of rapid economic growth, and highlighted that greater accountability in government may result in a short-term chilling effect but lead to better governance in the future. Vaishnav called for a systemic approach to combating corruption, not just short-term fixes like fast-track courts for offenders. Finally, he credited India’s independent supreme court and election commission as powerful antidotes to corruption, and praised recent right-to-information legislation as a good first step toward greater transparency.

  • Making Friends With the Neighbors: Nehru lauded India’s much-expanded economic partnerships with East and Southeast Asia, but added that New Delhi’s role in the region is dwarfed by China’s tremendous investments in infrastructure and capital. Structural changes in the region’s economic and political landscapes, however, may hold great opportunities for India. With wages on the rise in China, Nehru argued that Chinese businesses may look to India as a source of cheaper labor. Likewise, Nehru cited regional fears of overdependence on China as a motivation for other countries to expand their trade ties with India. But in the end, he cautioned, India will have to make good on its promises to fully reform its trade policies if it is to attract investment from abroad.