The Great Unlock: India in 2035

This document summarizes Nandan Nilekani’s keynote address at the Arkam Annual Meet 2025, focusing on India’s economic growth trajectory and the strategies needed to achieve an $8 trillion economy by 2035. The presentation identifies key challenges and proposes four “unlocks” to accelerate growth.

Key Insights

The Need for Accelerated Growth

• Baseline Growth: At a 6% Compound Annual Growth Rate (CAGR), India’s economy is projected to reach $6 trillion by 2035.
• Aspirational Growth: An 8% CAGR is needed to significantly improve living standards and reach a broader segment of the population.
• Beyond Business as Usual: Achieving 8% growth requires a shift from current practices and targeted interventions.

The Transformative Power of Digital Public Infrastructure (DPI)

• Aadhaar’s Success: Aadhaar has achieved near-universal coverage (over 1.2 billion adults), demonstrating the potential of DPI.
• e-KYC Cost Reduction: Aadhaar-based e-KYC has drastically reduced verification costs (from $23to$0.50).
• UPI’s Impact: The Unified Payments Interface (UPI) processes billions of transactions monthly, showcasing the scale of digital adoption.
• BBPS Success: The Bharat Bill Payment System (BBPS) handles hundreds of millions of bill payments monthly.

Technology as the Bridge

• DPI + AI: The combination of Digital Public Infrastructure and Artificial Intelligence is presented as the key to reaching the next billion Indians.
• Focus Areas: This includes leveraging AI for language accessibility, user interface improvements, knowledge dissemination, contextualization, and Indic voice support.

Unlocking Capital

• Account Aggregator (AA): This system empowers individuals and businesses to leverage their own data for credit access.
• Land Tokenization: Tokenizing land assets is proposed as a major unlock, potentially freeing up significant capital (estimated at $3.3 trillion based on World Bank and McKinsey data).

Addressing Spatial Inequality

• Digital Bridges: Digitization is presented as a way to bridge spatial inequality.
• Examples:
  • KreditBee: 80% of loans disbursed in non-metro cities.
  • Rapido: 20% of rides occur in non-metro cities.

The Rise of Entrepreneurship

• Startup Growth: India is projected to have 1 million startups by 2035, growing at a 20% CAGR.
• Startup Ecosystem: The presentation highlights the “binary fission” of startups, where successful companies spawn new ventures.
• Unicorns: India has created approximately 100 unicorns, with around 2000 funded startups.

Formalization as a Key Unlock

• Low Formalization: A significant challenge is the low percentage of individuals and businesses in the formal economy.
• Portable Benefits: The need for portable work credentials and benefits is emphasized to encourage formalization.
• Simplifying Laws: Reducing regulatory complexity and simplifying laws is crucial for fostering entrepreneurship.

Key Statistics & Data

• India’s Economy:
  • 2015: $2.1 trillion
  • 2024: $3.8 trillion
  • 2035 Projection (6% CAGR): $6 trillion
  • 2035 Aspirational Target (8% CAGR): $8 trillion
• Digital Infrastructure:
  • Aadhaar: 0-1.2 Billion (almost 100% coverage among adults)
  • e-KYC Cost: $23to$0.50 (per verification)
  • UPI: 16 billion monthly transactions, 350-400 million users
  • BBPS: 240 million monthly bills paid
  • Account Aggregator: $10 billion in loans facilitated, 2.1 billion financial accounts with AA facility, 144 million cumulative AA-based data sharing
  • DigiLocker: 7.5 billion issued documents
  • Digiyatra: 14 million passengers since Dec 2022
  • FASTag: 4 billion digitally paid tolls per annum
• Income and Geographic Disparity:
  • Per Capita GDP: Telangana ($3811),Bihar($652)
  • 13 out of 788 districts contribute to 50% of GDP
  • Top 10% earners: ~60% of total income
  • Bottom 50% earners: ~₹71,163 per annum
• Asset Ownership:
  • Real Estate: 50% of Indian household assets (compared to 40% in the US)
• Formal Economy:
  • Only 15% of Indians are in the formal economy.
  • 63 million MSMEs, but only 8 million file GST.
  • Only 1 million companies pay ESI and PF.
• Capital Markets:
  • Angel Investors: 7900+
  • Venture Capital AUM: $45 billion
  • Family Offices AUM: $30 billion
  • Private Equity AUM: $40 billion
  • Public Market Exits (FY23): $15 billion
  • Equity investors: 100 million
  • Equity as a % of household assets: India (4.8%), US (18%)
  • Gross Annual SIP Flows (2023-24): $24 billion
• Startups:
  • 150,000 startups today, projected 1 million by 2035 (20% CAGR)
  • ~100 unicorns in India, ~2000 funded startups
• Fertility Rate:
  • Bihar: 3
  • Replacement Rate: 2.1
  • Karnataka: 1.7
• Digital Adoption:
  • 500+ million smartphone users
  • WhatsApp: 530 million users
  • PhonePe: 350 million users

Recommendations

The presentation concludes with key recommendations for achieving the $8 trillion economy goal:

1. AI for a Billion Indians: Focus on last-mile consumers and MSMEs, emphasizing agriculture, health, and education. Utilize AI for Indian languages and contextualization.
2. Accelerate Capital: Maximize Account Aggregator penetration and enable land monetization via tokenization.
3. Turbocharge Formalization: Create portable work credentials and benefits. Simplify laws and compliance requirements.
4. Entrepreneurship: Fund startups outside of major metropolitan areas.

The overall message is that India has a unique opportunity to accelerate its economic growth by leveraging its digital infrastructure, promoting entrepreneurship, formalizing the economy, and addressing key challenges like income disparity and access to capital.