The Pareto Principle of India

India has just celebrated its 80th Independence Day. It’s a moment that naturally invites pride in me. Born to a family of government employees involved in this nation-building exercise, I saw the struggles of this journey. However, the part that I'm more curious about is the road ahead.

Why the next 20 years matter

Eighty years feels like a long time, yet when it comes to India, it barely feels like the prologue. The real story is still being written. I can't help but compare it to the Pareto Principle I learned in university. In most systems, 20% of the effort produces 80% of the results.

We have spent the last 80 years completing only the first 20% of the task. I don't mean it in any critical sense. It was the most foundational and essential work that the country had to do. While some may complain it could've been better, let's not forget it could've been a lot worse too. In 1947, India was left hollowed out from the inside by more than a century of colonial rule. 

However, the remaining 80%, the real journey, lies ahead over the next 20 years. India has laid the foundations: a stable economy, the momentum of economic growth and a young workforce to keep the engine running for the next 2 decades. The next two decades will determine what India truly becomes. Hopefully, a strong, prosperous, and independent nation.

I spoke to several of my friends and family about this over the past few weeks - people in academia, my peers in finance and technology, and my older relatives who contributed in their own way to the country's development over the last 40 years. They are retired now, and their cynicism or optimism depends on what they read in the newspaper on the day this question is asked. Nevertheless, it was interesting to hear their perspectives.

Whenever they look back, they point to the pivotal moments which led to widespread changes over the next few years - the green revolution, the liberalisation in the 90's, and the Tech boom of the past 2 decades. Whenever they speak about the future with my peers, it varies from "things won't change around here" to "it will be amazing if only xyz changes". There's always a "but" somewhere.

So I decided to base my analysis on the one thing I know well - money. In this case, GDP per capita and its growth, in real terms. I've used the World Bank's data and made some approximations wherever necessary. It is a crude metric, and I'm not taking into account its distribution within the country. I'm aware the latter matters a lot when one speaks about 1.5 billion people. However, everyone will agree that its sustained growth signals progress and development. It changes people's lives, albeit in ways that may not always be tangible.

So where could India be in the Next 20 Years? 

The Realistic Scenario: Keeping the Same Growth Rate

Over the past decade, India’s real GDP per capita grew at approximately 4.7% per year. If India simply maintains this pace over the next 20 years, it will still meaningfully transform the country. Real income per person (constant 2015 USD) rises from around $2,500 to $6,400

That’s a 2.5× increase in real living standards. It is steady, compounding progress that transforms the lives of 1.5 billion people, albeit not equally. To put it into perspective, the average Indian, 20 years from now, will live a life similar to how an average person in places like Indonesia, Albania, Georgia, and Azerbaijan live today.

The Optimistic Scenario: Growth Rate Rises by 1%

Now imagine India lifts its real per‑capita growth rate from 4.7% to 5.7%. I won't debate whether this is achievable for now or how to even get there. You can call me a dreamer and indulge me on this one. In this case, real income per person rises to $7,500. That’s a 3× increase in real living standards.

What does $7,500 feel like today? It resembles countries such as Serbia, Montenegro, Turkey, and Thailand. If you are an Indian and if you ever travel to these countries, look at the average person walking the streets there. That's how your average countryman hopes to live, 2 decades from today, assuming your country does a really good job.

The Ugly Truth: What Politicians don't tell us

Here is the part no politician in India will say out loud. Even in the optimistic scenario, India does not reach China’s current level of prosperity in the next 2 decades. China sits at almost $14,000 real GDP per capita. Even by my optimistic standards, India would need 31 years to get there. An average Indian will live with the same quality of life as an average Chinese citizen today, in 2057.

By any means, I don't mean to insinuate that India is failing. Nation‑building is slow, especially when a nation has been exploited, and its resources extracted mercilessly for so long. Prosperity compounds over generations, not election cycles.

India will get there eventually, but not by pretending the math is different. Until then, the politicians would rather point to our less prosperous neighbours to distract us from this ugly truth and from the right benchmark against which to measure ourselves. It hides their incompetence better.

A little space for optimism

I'm not trying to be cynical in this article. I'm optimistic about India, as any citizen should be. India is doing well in several areas. India does play a key role in technology, space, pharmaceuticals, and IT engineering. A competitive entrepreneurial ecosystem is also building in the country. Lastly, as a little payback, our colonial masters now envy us in the very sport they invented - Cricket.

I should also mention that while these are averages, they don't apply to everyone. The top 10-20% of the country enjoy a standard of living similar to some European nations even today. When the average moves towards this over the next 2 decades, the top 20% can probably expect living standards akin to First World countries. 20% of 1.5 billion people are 300 million lives, living the same quality of life as an average Brit.

The truth is that no matter what happens, India will be a vastly better place to live. More prosperous. More capable. More confident. We just need to make sure that no power, internal or external, distracts us from this.

I'm not here to offer solutions. There are brighter minds than me for this. I can only keep hope. As long as India, as a nation, sticks to its task and aspires to be better every day, it'll get there. The last 80 years built the foundation. India will build itself to what it deserves to be over the next 20 years.