India, Feb. 2 -- Recently, the Union government asserted that the Indian economy is experiencing a "Goldilocks moment" (a coinage borrowed from the popular children's tale to denote when everything is just right). Inflation was under control, and the real rate of growth was the highest in the world. Unfortunately, that too is a fairy tale. India's growth rate is at least two percentage points below what is needed to capitalise on a demographic dividend. Investors are clearly not buying the story. Foreign and domestic investors have turned 2025 into the year that saw the flight of capital from India, in turn, leading to the dramatic depreciation of the rupee.

Global headwinds that followed the imposition of the Trump tariffs meant that In...