Prime Minister Narendra Modi highlights India’s rapid economic progress, contrasting its past vulnerability as part of the ‘Fragile Five’ with today’s status as a key global economy, after overtaking Japan as the world’s fourth-largest.
Prime Minister Narendra Modi used his Independence Day address at the Red Fort to revisit one of the weakest periods in India’s recent economic history, saying the country was once counted among the world’s “Fragile Five” economies. He framed that label as a contrast to the present day, when India is widely seen as one of the fastest-growing major economies and, after overtaking Japan last year, the world’s fourth-largest economy.
The term “Fragile Five” was coined in 2013 by Morgan Stanley for Brazil, India, Indonesia, South Africa and Turkey, a group seen as especially exposed to external financial shocks. At the time, India faced high inflation, a widening current account deficit, a falling rupee and heavy reliance on foreign capital, all of which made the economy vulnerable as the US Federal Reserve prepared to scale back bond-buying stimulus.
India’s current account deficit reached 5.1% of GDP in 2012, according to the material cited, and the rupee fell by about 12% against the dollar within a few months. Economists at the time pointed to the risk that rising US interest rates could trigger capital outflows from emerging markets, leaving countries with weak external balances under pressure. Research on the Fragile Five has also linked economic fragility to factors such as reserves, exchange rates, external debt and fiscal sustainability.
India left the group in 2014 as its external accounts improved and foreign-exchange reserves strengthened. The International Monetary Fund later said India had delivered the fastest macroeconomic recovery among emerging economies, while analysts credited measures taken under then Reserve Bank of India governor Raghuram Rajan, including steps to curb gold imports and support exports. More recent data from the India Brand Equity Foundation and Business Standard show the economy continuing to expand strongly, with real GDP growth of 7.6% projected for fiscal 2025-26 and the third quarter of that year rising 7.8% under the new series, reinforcing the government’s argument that India has moved far beyond the conditions that once defined the “Fragile Five”.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
