India, July 16 -- The view of how we are doing as a nation depends on which side of the political divide you are on. The further you go in either direction, the starker the difference between reality and perception. When I look at various metrics and their directions, the conclusion that I come to is this: India is doing much better than before on poverty, inequality, growth, per capita income, nutrition and digitisation. It is on a path of compounding that will really show results in the next decade. But there are deep problems that are holding back a move to the next gear to pick up speed. These include deep endemic corruption, lack of judicial reforms, dysfunctional municipal corporations, and a compliance and inspector raj that adds layers of costs in terms of both money and time. The headlines have told us that we are on the way to becoming the world's third-largest economy in a few years. We also know that India is the fastest-growing economy in the world with an expected GDP growth of 6.5% in the current year. But per capita income at $2,700 in 2024 makes India stand far lower than the global average. To perceive the direction of change in this metric, we need to see that it has grown at a compounded rate of 7.6% a year for the last 20 years, which is not a bad rate of growth. Expect per capita income to go up sharply over the next decade as the middle-class expands. But has this growth come at the expense of the people? No. Poverty levels are dramatically down over the past decade. Using World Bank data, poverty as measured by the number of people living on less than $3 a day has shrunk from just over 27% in 2011 to slightly higher than 5% in 2022. This has lifted almost 270 million people out of extreme poverty in a decade. Reduction in poverty has a direct impact on inequality. As measured by the Gini Index, India does well on this score with a Gini of just over 25 marking it as a low to moderate inequality. While there is debate on this being based on consumption rather than income, in the absence of robust income data in India, we should look at the trajectory rather than the number. That says that inequality has indeed fallen, from almost 29 to just over 25 over the decade ending 2022. Even intuitively, it would be difficult to believe inequality has risen, given that more people got pulled out of poverty and the number of those in the middle class grew. At the heart of the poverty and inequality story is the success of India's attempt at growth with redistribution. Most aspirational welfare economies of the Global North became rich before they redistributed. India, by giving universal suffrage and targeting a welfare state model while being desperately hungry and poor, put an almost impossible target in front of governments and policymakers. Now finally, as poverty numbers go down, the spending on nutrition is getting better. The latest data on consumption shows a heartening trend of higher levels of protein, dairy, fruit and vegetable consumption, especially in the bottom 20% of the population. The impact on health should begin to show up in the next decade. The macro picture looks good with both inflation and fiscal deficit under control. The hard decisions taken during Covid - of fiscal responsibility, the removal of off-balance sheet items during that time, the clean-up of the twin-balance-sheet problem after the debt splurge 15 years ago, and a tight monetary policy - have all worked in tandem to give India a gym-fit body, especially when compared to the debt-bloated US. But we know that to achieve higher levels of development and per capita income, a 6.5% growth rate is not enough. There are serious roadblocks to stepping on the accelerator, and these are not easy knots to untangle. The lack of judicial reforms is one of the top contenders for what is holding India back, and related to this are the delays and roadblocks in contract enforcement, property registration, and resolving a commercial dispute. The others are endemic corruption, regulatory cholesterol and the inspector raj that entrepreneurs and citizens are subjected to. A report from the World Economic Forum pins bribes at 50% of the project cost in infrastructure and real estate. One only has to look at the inflated residential property prices in the large cities that result in rents being a fraction of the mortgage costs to see the impact of corruption. That day-to-day rent-seeking from smaller businesses is also included in the final consumer prices hitting the small fraction of the Indian population that pays income tax hurts even more. Death by compliance and, related to it, the inspector raj are other chains that tie down India's growth. An ORF-TeamLease report maps over 26,000 clauses across various laws that carry a potential penalty of imprisonment for non-compliance, for infractions as mundane as the enterprise not reconstituting the canteen committee every few years. India began this journey as a desperately poor, hungry country that lived largely in darkness on kuccha roads. That story has changed dramatically post 1991, but the road from poverty to prosperity is a continuum and cannot be a straight jump from desperately poor to a middle-income country. The data seems to indicate that we are well on our journey. There are potholes and road blocks, but the grand strategy of pulling out of poverty towards the aspiration of having enough is truly in play....