India’s Superpower Potential: Missed Opportunities and Unmet Dreams

Why India Lagged Behind in Becoming a Superpower: The Historical Choices That Shaped Its Destiny

India’s journey from a civilization that once accounted for 27% of global GDP in 1700 to a nation struggling with systemic challenges today is a story of missed opportunities, colonial exploitation, and post-independence policy failures. While the U.S. leveraged geographic isolation, industrialization, and institutional innovation to ascend as a superpower, India’s trajectory was derailed by a combination of structural disadvantages and self-inflicted wounds. Below is an analysis of the key historical decisions and systemic flaws that have kept India from realizing its potential.

1. Colonial Exploitation: The Roots of Systemic Disadvantage

Deindustrialization and Wealth Extraction

British colonial rule (1757–1947) systematically dismantled India’s economic foundation:

Wealth Drain: An estimated £45 trillion (adjusted for inflation) was siphoned to Britain through taxes, trade imbalances, and resource extraction.
Forced Agrarianization: India shifted from exporting textiles (25% of global manufacturing in 1750) to supplying raw materials like cotton and indigo, destroying its artisanal economy.
Human Capital Destruction: Colonial policies triggered 12 major famines, killing over 60 million people and stunting workforce productivity.

By 1947, India inherited 15% literacy, minimal infrastructure, and a GDP share reduced to 3% globally.

2. Post-Independence Policy Missteps (1947–1991)

Socialist Planning and the License Raj

India’s leaders rejected market economics, opting for Soviet-inspired central planning:

Anti-Business Environment: The "License Raj" bureaucracy stifled entrepreneurship. In the 1970s, citizens faced an 8-year waitlist to buy a scooter.
Neglect of Agriculture: Despite employing 70% of the workforce, farm productivity stagnated due to underinvestment in irrigation and technology.
Foreign Investment Hostility: Companies like IBM and Coca-Cola exited India in the 1970s due to restrictive policies, delaying technological transfer.

Result: From 1966–1980, per capita GDP grew at 1% annually, trapping millions in poverty.

Foreign Policy Neutrality and Its Costs

Cold War Non-Alignment: While China secured Western investment post-1979, India’s tilt toward the USSR limited access to World Bank loans and technology. Soviet aid totaled $5 billion vs. $130 billion from the U.S. Marshall Plan to Europe.
1962 Sino-Indian War: Nehru’s misplaced trust in China led to a military rout, diverting resources to defense instead of development.

3. Education and Human Capital Deficits

The Precocious Democracy Trap

India became a democracy before achieving basic literacy or infrastructure, creating a vicious cycle:

Education Gap: In the 1970s, China’s literacy rate was 65% vs. India’s 34%, enabling China’s manufacturing boom.
Wealthy Exit from Public Systems: Elite reliance on private schools/hospitals reduced tax revenues, perpetuating underfunded public services.

Today, India’s 74% literacy lags behind Bangladesh (75%) and Vietnam (95%), while healthcare spending is $75 per capita vs. $10,000 in the U.S.

4. Governance and Institutional Decay

Local Governance Failures

India’s "precocious democracy" created dysfunctional local governance:

Caste-Based Patronage: Politicians prioritize subsidies for specific voter blocs over public goods like roads or schools.
Short-Termism: Investments focus on visible projects (metro systems) rather than long-term needs (education reform).

Corruption and Bureaucratic Inertia

License Raj Legacy: Red tape persists; India ranks 85th in Corruption Perceptions Index (2023) vs. the U.S. at 24th.
Military Modernization Failures: Despite a $72 billion defense budget, 70% of military hardware is imported, exposing supply-chain vulnerabilities.

5. Economic Structural Imbalances

Services Over Manufacturing

Unlike China’s export-driven industrialization, India skipped manufacturing:

IT Sector Limitations: The tech boom created wealth but employs only 5 million people, leaving 45% of workers in low-productivity agriculture.
Unemployment Crisis: Youth unemployment hit 23% in 2024, with 60% of engineering graduates unemployable due to skill gaps.

Delayed Reforms

India’s 1991 liberalization came 40 years after Japan and South Korea’s reforms. While GDP growth accelerated to 6%+, China had already cemented its position as the "world’s factory."

6. Geopolitical Misalignments

Strategic Incoherence

Cold War Isolation: U.S. support for Pakistan and India’s Soviet ties limited access to Western capital.
Quad vs. BRICS: India’s attempt to balance alliances with the U.S. (Quad) and Russia (BRICS) has diluted its strategic focus.

7. 21st-Century Challenges

Infrastructure vs. Aspirational Goals

While launching Mars missions, 600 million Indians lacked toilets in 2014. Modi’s "Smart Cities Mission" prioritized tech hubs over rural sanitation.

Coalition Governance

The 2025 election’s fractured mandate risks policy paralysis. Unlike China’s centralized model, India’s democracy requires consensus-building, slowing reforms.

Why China Succeeded Where India Failed

Authoritarian Efficiency: China’s one-party system prioritized education, FDI, and infrastructure.
Export-Led Growth: Special Economic Zones attracted $180 billion in FDI annually vs. India’s $85 billion.
Demographic Dividend: China’s workforce peaked at 940 million in 2015; India’s will peak in 2040 but lacks the skills to capitalize.

Path Forward: Learning from History

Fix Local Governance

Empower municipalities to collect taxes and improve services, breaking the "precocious democracy" cycle.

Manufacturing Push

Adopt Vietnam’s labor-intensive export model to absorb 12 million annual labor-market entrants.

Human Capital Investment

Redirect subsidies to universal healthcare and vocational training.

Strategic Pragmatism

Leverage U.S.-China tensions to attract FDI while avoiding overalignment.

Conclusion: A Superpower in Theory, Not Practice

As historian Ramachandra Guha argues, India remains a "50-50 democracy"—its potential hamstrung by colonial scars, socialist dogma, and institutional decay. While recent reforms in digital infrastructure (UPI payments) and renewable energy signal progress, bridging the gap with superpowers requires confronting uncomfortable truths: India prioritized politics over productivity, symbolism over substance, and caste over competence.

The lesson is clear: Nations become superpowers by making hard choices, not by romanticizing past glory. For India, the 21st century must be about building toilets before temples.

Sources: BBC, LSE, Raghuram Rajan, Davesh Kapur, World Bank, Corruption Perceptions Index.

Citations:

in History