Every economy needs optimism. Investors respond to confidence, consumers spend when they feel secure and markets dislike panic. But optimism becomes counterproductive when it begins to substitute for introspection.

Contemporary public discourse on the Indian economy is increasingly characterised by a reassuring narrative: oil prices remain manageable, foreign exchange reserves comfortably finance imports, automobile sales indicate resilient consumption, agricultural output is stable despite climatic uncertainties, and India continues to be among the fastest-growing major economies in the world.

The depreciation of the rupee, we are told, is largely a consequence of global capital flows and a strengthening US dollar rather than domestic weakness.

None of these observations is inherently incorrect. India has indeed demonstrated remarkable macroeconomic resilience in the face of repeated global shocks. Foreign exchange reserves remain among the largest in the world, private consumption contributes more than half of GDP and growth continues to outpace most major economies.

Yet resilience is a description of an economy’s ability to absorb shocks. It is not, by itself, a development strategy. The more fundamental question is whether India possesses a coherent economic philosophy that can translate resilience into broad-based prosperity.

That question becomes particularly relevant when policymakers repeatedly describe India as a demand-driven economy. If household consumption accounts for nearly 56%-57% of GDP, then strengthening domestic demand should be the organising principle of economic policy. Demand-driven growth cannot be sustained merely through aggregate GDP expansion – it requires rising household incomes, productive employment, growing entrepreneurship and a confident middle class willing to consume and invest.

Instead, the current policy architecture appears caught between two competing impulses. On one side lies an expansive welfare state that reaches more than 81 crore beneficiaries through programmes such as PM Garib Kalyan Anna Yojana, providing an essential social safety net by providing 5 kg of free food grain to beneficiaries in vulnerable households. On the other lies an industrial strategy centred on production-linked incentives and the creation of globally competitive national champions expected to drive investment and exports.

Both approaches are defensible and, indeed, necessary in a developing economy. Yet neither directly addresses the central challenge of a demand-driven........

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