W hen Prime Minister Narendra Modi entered office in 2014, there were high hopes that the Indian leader would be a free-market reformer. “Government has no business to do business,” said Modi, responding to an accusation that his Bharatiya Janata Party (BJP) was turning into a socialist party. Yet, instead of free markets being at the forefront of the Indian economy, the state still plays a significant role in influencing economic relationships under Prime Minister Modi.

While India is the world’s fifth-largest economy and one of the fastest growing, it is categorized as “mostly unfree” by the Heritage Foundation’s latest Index of Economic Freedom. Heritage’s ranking is the result of New Delhi’s repressed property rights and fiscal health, as well as an inefficient regulatory environment. India’s overall score falls below both the regional and world average.

For several decades, India was plagued by socialist economic policies. Jawaharlal Nehru, the country’s first prime minister, saw socialism as a way to modernize India and pushed heavy government involvement in the economy. His daughter, Indira Gandhi, who became prime minister in 1967, continued India’s socialist trends by nationalizing several industries — banks, coal, copper, and general insurance.

But India pivoted in the 1990s and 2000s, as globalization led to an unprecedented rise in trade, financial, and digital integration. Economic liberalization has allowed New Delhi to become a formidable force in information technology.

Since the BJP came to power in 2014, however, India has started diluting or reversing some aspects of globalization by adopting a Hindu-nationalist approach to governance. Modi has made some free-market moves, such as privatizing Air India, liberalizing some aspects of employment law, and opening up more industries for foreign direct investment. But overall, his economic record has fallen short of what it could accomplish.

Modi’s “Make in India” 2014 electoral pledge to boost manufacturing to 25 percent of Indian GDP has fallen flat, as manufacturing’s share in India’s GDP has slightly declined to 13 percent, according to the latest figures. Despite the prime minister’s promise to add 100 million manufacturing jobs, India lost 24 million between 2017 and 2021.

Protectionist measures imposed under Modi return the government’s meddling in the economy. In 2023, the Indian government introduced Production Linked Incentive (PLI) Schemes for 14 key sectors, including pharmaceuticals, steel, and textile products. Such incentives allow the government to pick winners and losers, continuing the proliferation of already rampant crony capitalism.

Modi’s centralized approach has failed to adequately address the country’s most significant domestic issues, including pollution, unemployment, and education. In 2019, the Modi government launched a program to improve air quality in 131 cities across 24 states and union territories. However, only 69 of the 131 cities in the program had real-time air quality monitoring. Despite 14 cities recording a 10 percent or more reduction in particulate matter between 2019 and 2021, 16 cities saw an increase. Other measures, including subsidizing solar pumps to almost 100,000 farmers, are emptying already-stressed water reserves.

Meanwhile, the unemployment rate for recent graduates under 25 in 2023 was high, with 42 percent unemployed. India’s unemployment rate climbed to the highest in more than two years in October 2023, as rural unemployment jumped to 10.8 percent from 6.2 percent, while the urban rate stood at 8.4 percent. Public schooling in India faces numerous challenges, including inadequate infrastructure, teacher shortages, outdated curricula, and high dropout rates.

Due to globalization, New Delhi has made enormous strides in development. However, the BJP-led government has missed many opportunities to address prevalent issues by overcommitting to centralized policies. A more thorough embrace of free markets would serve India well.