India's 7.8% Growth Surge: Why traditional western economic models fail to explain it

India economy growth (Sanghnomics is a weekly column that tracks down and demystifies the economic world view of Rashtriya Swayamsevak Sangh (RSS) and organisations inspired by its ideology.) India's first-quarter GDP numbers have taken the world by surprise. As the rest of the world faces supply chain disruptions, sticky inflation and a growing burden of debt, India's real GDP grew 7.8 per cent. Real Gross Value Added (GVA) expanded by 8.2 per cent, while investment rose 11.9 per cent. Household consumption grew 7.1 per cent, and exports climbed 12 per cent. Behind these numbers lies a structural transition and the emergence of a new economic model rooted in ancient Hindu economic thought. In modern economic terms, you may call it 'Dharmic Capitalism'. The critics who are questioning these numbers are finding this staggering growth unusual because the lens through which they are looking at it is flawed. They are using traditional yardsticks to assess the Indian economy. These yardsticks are primarily confined to Anglo-American capitalism, European welfare capitalism or Chinese state capitalism. But India fits none of these standard categories. What India has done over the last decade is to create a synthesis where markets and entrepreneurship are combined with strategic state intervention, backed by public infrastructure and technological enablement. However, all this has been done with a conscious and explicit concern for social responsibility. This synthesis can best be understood as Dharmic Capitalism, rooted in ancient Hindu economic thought. In the modern era, Rashtriya Swayamsevak Sangh (RSS) thinkers such as Dattopant Thengadi and Deendayal Upadhyaya propounded an India-centric indigenous economic framework through the 'Third Way' and 'Integral Humanism', respectively. The Modi government implemented this framework on the ground, and that is what has insulated India's economic growth from global shocks even as other major industrial economies are struggling to keep their heads above water. Wealth as a Means, Not an End The common perception is that the Dharmic worldview shuns any kind of wealth and prosperity. But in ancient Hindu economic thought, the pursuit of wealth and material prosperity is considered legitimate. However, the economic activity undertaken to create material wealth also needs to take 'social responsibility' into account. In the Atharva Veda, this has been aptly explained through the following mantra: Śatahasta samāhara sahasrahasta saṃ kira | Kṛtasya kāryasya ceha sphātiṃ samāvaha ('O human! Gather and acquire wealth with a hundred hands through honest work and multiple noble endeavours, and scatter it away in charity and public welfare with a thousand hands. Thus, bring immense prosperity and growth to the works you have completed and those you are yet to undertake.') This philosophy is fundamentally at odds with conventional capitalist and Marxist economic models, where either the maximisation of individual wealth or complete state control in the name of welfare becomes the measure of success. Integral Humanism and the 'Third Way' Deendayal Upadhyaya's Integral Humanism provides a crucial lens for this argument. It may be recalled that Integral Humanism is the official ideology of the ruling Bharatiya Janata Party (BJP). According to Upadhyaya, development cannot be measured only through parameters such as consumption, output or income. He emphasised that people are more than just economic units and should be viewed as whole beings. Social, cultural and moral aspects need to be given equal importance. Upadhyaya stressed Swadeshi and decentralisation. He pushed back against the assumption that India must simply copy Western development playbooks. Dattopant Thengadi carried this idea further with his 'Third Way', an economic and socio-political framework conceived as an alternative to both unrestrained capitalism and state socialism. Drawing on Integral Humanism, Swadeshi and Sanatan Dharma, Thengadi dismissed the traditional Western and Marxist notion of an inevitable and permanent clash between labour and capital. He proposed that workers, entrepreneurs and capital should become co-participants in one national economic ecosystem. That framing is reflected in India's current economic growth, which is based on the fundamental concept that a durable growth model cannot reduce labour to a mere cost, capital to a mere extraction tool, or the state to a mere regulator. Each has a part to play. They should complement each other rather than compete. Kautilya and the Enabling State This thinking traces back to Kautilya's Arthashastra. Kautilya envisaged the state as an active sovereign that has to bear responsibility for creating conditions in which productive economic activity could flourish. For Kautilya, agriculture, trade, taxation, infrastructure, treasury management and economic security were all matters of statecraft. But this did not mean that the state had to own everything. That distinction is central to understanding contemporary India, where the state is increasingly attempting to enable markets rather than replace them. PM Gati Shakti is a classic case study that reflects Kautilya's framework. It was launched in 2021 to integrate planning across various ministries through digital and geospatial systems. The objective was to reduce logistical bottlenecks, improve multimodal connectivity and consequently lower the cost of moving people and goods. The significance of this scheme goes beyond infrastructure delivery. It is an on-the-ground example of how governments can become economic enablers without resorting to centralisation, thereby increasing overall productivity. PLI and Strategic Industrial Policy The Production Linked Incentive (PLI) scheme extends this logic into industrial policy. This scheme shuns the licence-quota raj and instead uses targeted incentives to build domestic productive capacity in strategically important sectors. Across 14 sectors, the programme had attracted more than ₹2.40 lakh crore in investment by 31 March 2026, generated over ₹15.2 lakh crore in exports and created more than 14.15 lakh direct and indirect jobs. The best manifestation of the policy of 'strategic self-reliance' has been reflected in the electronics manufacturing arena. Look at India's mobile phone production. It has risen sharply since the introduction of the PLI scheme. Around 99.2 per cent of mobile phones used in India are now made domestically. This is a classic example of building domestic capability while staying integrated with global markets. Thus, when we talk about Atmanirbharta, it is about resilience and enhanced productive capacity, not economic isolation. The Digital Infrastructure Revolution India's Digital Public Infrastructure is a global example of how social capital can be created to empower the most marginalised, giving the economy the fuel required to move ahead at a rapid pace without being affected by global chaos. The Kautilyan principle that the state should create conditions for more productive and inclusive economic activity perfectly applies to India's digital public infrastructure. Platforms such as Aadhaar and UPI have created common digital rails on which millions of individuals and businesses transact. Rather than ceding digital infrastructure entirely to private monopolies, the state has built interoperable public platforms on which private innovation can flourish. So today, we have an ideal hybrid architecture where public infrastructure, private enterprise and competitive markets operate together. Conclusion Thus, India's 7.8 per cent growth deserves to be read as more than a GDP statistic. It reflects a distinctly Indian synthesis of markets, state capacity, technology, enterprise and social responsibility. That synthesis is what we might reasonably call Dharmic Capitalism — a framework in which wealth creation is encouraged, enterprise is respected, the state creates enabling conditions, and economic power is ultimately expected to serve society. India, in other words, may not simply be catching up with established economic models. It may be building one of its own. Earlier Sanghnomics columns can be read here . (Arun Anand has authored two books on the RSS. His X handle is @ArunAnandLive.) Views are personal, and do not represent the stand of this publication.