India is attempting to do something the world has never seen before. So claimed Niti Aayog, the government of India’s policy thinktank, earlier this year. It said that no major economy has tried to expand GDP nearly eightfold within a generation while simultaneously redirecting its energy and industrial systems to reach net zero within two generations. Hence its detailed report’s claim that there is “no historical precedent”.
There is something to this. China industrialised at vast scale, but not on a sustainable net zero path. Korea, Japan and Europe became wealthy by industrialising before decarbonising. Today, rich nations have already satisfied the basic demands of their people and created the infrastructure and high per-capita energy use that India is still trying to build. The world’s most populous country has to do this while also reducing emissions.
The climate emergency is all too real for New Delhi. In April, on a single day, all of the planet’s top 50 hottest cities were in India. Yet the country still relies heavily on coal, especially at moments of peak power needs. This sets up a dangerous feedback loop: heat drives cooling demand; cooling demand drives coal-burning; coal‑burning drives temperatures higher. India is trying to change course. Non-fossil fuel sources now account for more than half of installed electricity capacity.
The report assumes India reaches $30tn GDP by 2047, with rising urbanisation, industrialisation and living standards. India’s net zero path will be judged politically by who bears the costs and who captures the gains. But the thinktank reasons that as India grows fast, so energy and infrastructure demand and investment rise too, and, voilà, India continues to grow fast. This may be a virtuous cycle. But left unexplained is what source of demand gets the process going and sustains it.
That requires a political economy of investment. It means explaining who spends first, who guarantees demand, how businesses are induced to keep building when existing factories are not fully used, and how private profitability is maintained when consumption’s share of national income falls.
India’s solar success partly answers these questions. In a 2025 paper, the political economist Mathias Larsen argues that India’s advances in sunlight-powered electricity came because the state created a market, used public sector financial firepower and protected domestic producers. That is not a story of private finance spontaneously allocating capital. It is a story of state-made demand.
But solar is one sector. A whole-economy transition may not work the same way. What happens when domestic demand can’t soak up the state-created capacity? China answered that question through exports, but only because of a historically exceptional bargain. Washington opened the American market to China on favourable trading terms in 1979. Nothing reversed that access. China’s government was allowed to heavily intervene in the macro- and micro-economy to drive rapid industrialisation and growth inside the US-led trading global system.
India faces a far more hostile environment. It is industrialising in a world of fragile supply chains, climate trade barriers and Chinese export overcapacity. That makes the question of India’s domestic demand more important, not less. The mainstream view still assumes private investors will allocate capital efficiently once cash is mobilised. But that does not explain why firms would invest at the necessary scale unless the state spends first, guarantees markets and coordinates sectors. This, sadly, may be the truth that cannot speak its name.
