The Great India Unlock by Nandan Nilekani: Trends that will drive India
Unlocking India’s Growth: From 6% to 8% by 2035
Nandan Nilekani recently shared his take on the future that lies ahead for India. This is a great perspective on unlocks that India will have - a must for anybody building for the Indian market.
India stands at a pivotal moment. With a steady 6% growth rate, the nation is poised for progress, yet the ambition is to elevate this to 8% CAGR, pushing GDP from a projected $6 trillion to $8 trillion by 2035. This leap demands more than business as usual—it requires unlocking technology, capital, entrepreneurship, and formalization. Drawing from transformative shifts like Aadhaar, UPI, and GST, alongside emerging innovations, here’s how India can redefine its economic trajectory.
Nandan has played a pivotal role in shaping India’s digital revolution. In this session, he unveiled a bold roadmap for how technology , entrepreneurship , capital , and policy can accelerate India's economic transformation.
Here are BigIdeas from Nandan Nilekani’s talk:
Only 15% of India’s workforce is formalized, compared to 60% in Brazil.
Of 63 million MSMEs, just 8 million file GST
Half of India’s wealth—$50 trillion—is tied up in land, yet it’s largely unmonetizable
Thirteen districts drive half of India’s GDP, while Bihar’s per capita GDP is one-sixth of Telangana’s
The top 10% earn 60% of income, leaving the bottom 15% with just ₹71,000 annually
Key Takeaways
Digital Public Infrastructure as a Growth Catalyst
India’s digital backbone—Aadhaar, UPI, GST—has already reshaped access and efficiency. Aadhaar slashed eKYC costs from $23 to $0.50, enabling 700 million bank accounts and 180 million demat accounts.
UPI, launched in 2016, now handles 16-17 billion transactions annually, serving 350-400 million users and 50 million merchants. GST unified goods markets, boosting tax formalization from 4 million to 14 million payers. These platforms demonstrate how scalable, low-cost infrastructure can drive inclusion and economic activity, setting the stage for broader growth.
AI-Powered Inclusion for a Billion Indians
Technology can bridge India’s linguistic diversity, with 22 official languages and hundreds of dialects. Affordable smartphones (sub-₹10,000) and 4G/5G networks will soon reach 800-900 million users. AI, leveraging open-source models like those from AI for Bharat, can deliver contextualized services in every dialect—think farmers accessing real-time agricultural advice or students learning in their native tongue.
This scalability, proven by DPI’s frugal success, promises to connect a billion people to opportunity.
Capital Ecosystem Fuels Ambition
India’s capital cycle—from seed funding to IPOs—is maturing. With 7,900 angels, $45 billion in VC assets, and $30 billion from family offices, startups have robust early-stage support. Public market exits hit $15 billion in 2023, driven by 100 million equity investors and $24 billion in annual SIP inflows.
Equity remains just 4.8% of household assets (vs. 18% in the US), signaling room for growth. This vibrant ecosystem positions India as a future IPO powerhouse.
Land Tokenization Unlocks Hidden Wealth
Half of India’s wealth—$50 trillion—is tied up in land, yet it’s largely unmonetizable. Tokenizing land assets via a digital ledger could transform this. Farmers and rural landowners could sell or leverage their property for credit, fueling entrepreneurship.
While a state-level challenge due to land’s jurisdiction, progressive adoption could release billions into the economy, addressing credit gaps like the $530 billion shortfall for small businesses.
Entrepreneurship Boom Beyond Metros
Startups are exploding, from 150,000 today to a projected 1 million by 2035, growing at 20% CAGR. Half are emerging outside metros, tackling local needs—e.g., Upnammart’s small-town stores or Anog’s supply chain for street hawkers.
Success breeds success: Flipkart spawned PhonePe, Zomato birthed others, and IPOs will spark hundreds more. This virtuous cycle, backed by angel investors, could decentralize opportunity and reduce spatial inequality.
Formalization Lags, But Potential Soars
Only 15% of India’s workforce is formalized, compared to 60% in Brazil. Of 63 million MSMEs, just 8 million file GST. Yet, 380 million Gen Z—born digital with Aadhaar and UPI—herald change.
New models like SmartStaff (formalizing 22,000 migrant workers) and Jar (digitizing daily savings) show promise. Scaling credentials and portable benefits could lift formalization to 80%, unlocking productivity and markets.
Spatial Inequality Demands Attention
Thirteen districts drive half of India’s GDP, while Bihar’s per capita GDP is one-sixth of Telangana’s. The top 10% earn 60% of income, leaving the bottom 15% with just ₹71,000 annually.
Migration—200 million moving north-to-south or east-to-west—reflects this divide. Digital tools like CreditBee, reaching 18,000 pin codes, can bridge gaps, but physical infrastructure must follow to balance growth.
Productivity Gap Hinders Progress
India lags globally, with productivity at $7 per hour versus $28 in China and $82 in the US. Low formalization and capital access stunt MSMEs, with only 29,000 firms boasting over ₹10 crore in paid-up capital.
Technology—AI for precision manufacturing, platforms like Zetwerk ($1.6 billion revenue)—can boost efficiency. Closing this gap is critical to sustaining higher growth rates.
Credit Access Revolution via Account Aggregators
Account Aggregators (AA) enable data-driven lending, with $10 billion in loans disbursed so far. CreditBee’s 50 million loans across 18,000 pin codes—averaging ₹30,000 in 10 minutes—showcases this potential.
Scaling AA penetration, integrating GST and income tax data, could flood small businesses with credit, addressing the $530 billion financing gap and accelerating economic activity.
Energy as the Next UPI Frontier
Electricity could mirror UPI’s disruption. Rooftop solar and EV batteries turn homes into energy producers, buyers, and sellers—think peer-to-peer trades with neighbors. This shift could spawn millions of “energy entrepreneurs,” but requires simpler laws and reduced compliance burdens. India’s packetized energy history (LPG cylinders) suggests readiness for this transformation.
Regulatory Overhaul for a Million Startups
A million startups by 2035 need a frictionless environment. Colonial-era laws, complex compliances, and criminal penalties stifle innovation.
Simplifying regulations—like the new Income Tax Act—while ensuring portable benefits (insurance, pensions) and credentials (skill certifications) can unleash entrepreneurial energy, especially outside metros, aligning with formalization goals.
MSMEs as Modern Enterprises
Of 63 million MSMEs, 10 million could modernize by 2035 with technology (ClearTax, UPI), markets (Meesho), and credit (AA). Forced formalization via GST and income tax, paired with startup platforms solving pain points—e.g., downtime prediction—can elevate these firms.
This shift could add significant GDP heft, narrowing the formal economy gap.
Notable Insights
“Over the last 15 years, Aadhaar went from 0 to 1.2 billion people, eKYC costs dropped from $23 to $0.50, enabling 700 million bank accounts.” (Digital Public Infrastructure as a Growth Catalyst)
“AI can make services accessible in every Indian dialect, taking what we have today to a billion people.” (AI-Powered Inclusion for a Billion Indians)
“India’s equity market is only 4.8% of household assets—there’s a long runway for growth as retail participation surges.” (Capital Ecosystem Fuels Ambition)
“Tokenizing land could unlock $50 trillion in wealth, turning idle assets into economic fuel.” (Land Tokenization Unlocks Hidden Wealth)
“Half of India’s startups are now outside metros, solving local problems and reducing spatial divides.” (Entrepreneurship Boom Beyond Metros)