India's economic journey since 2014 has been marked by a sharp expansion in infrastructure, digital payments and public investment. But the next phase will require deeper reforms in manufacturing, factor markets, financing and human capital, according to former Chief Economic Adviser K Subramanian.

Speaking to CNBC-TV18 as Prime Minister Narendra Modi completed 25 years as head of government, Subramanian said the government's performance should be assessed not only through individual schemes or projects, but also through its ability to provide public goods and respond to economic crises." The statistics speak for themselves," Subramanian said, pointing to the expansion in highways, railway electrification, airports and digital payments since 2014.

Infrastructure has been a major measure of government deliverySubramanian pointed to infrastructure as one of the clearest indicators of what has changed in the economy. He said India had constructed about 90,000-91,000 kilometres of highways between 1947 and 2014. Since then, the network has increased by more than 60% to nearly 1.5 lakh kilometres, according to the figures he cited.

Railway electrification has also expanded sharply. The electrified railway network increased from about 20,000 kilometres to around 70,000 kilometres during the 12-year period after 2014, he said. Digital payments provide another example. UPI did not exist before 2014, while India now records close to 25 billion transactions a month, according to Subramanian. The number of airports, he said, has also increased from about 19 in 2014 to 164.

Subramanian's broader point is that infrastructure is a public good and providing it is a central responsibility of government." These are aspects of what a government is supposed to do.

A government is actually supposed to be providing public goods," he said. Crisis management is another test of governmentSubramanian also sees the handling of major economic shocks as an important measure of government performance. He compared India's response to the global financial crisis with its response to the COVID-19 crisis and the economic disruption following the Ukraine war. According to Subramanian, the earlier crisis was accompanied by double-digit inflation for 18 months, a current account deficit of more than 5% and a deterioration in several macroeconomic indicators.

He said India had become part of the "fragile five".He contrasted this with the period after COVID-19 and the Ukraine war, when advanced economies experienced inflation at around two to four times their average levels. India, he said, had inflation below its average while retaining strong macroeconomic fundamentals. For Subramanian, the comparison shows how the government's role extends beyond infrastructure. Managing a crisis while maintaining macroeconomic stability is another part of government delivery. He said these two aspects — providing public goods and managing crises — illustrate how government delivery has improved.

The next challenge is a new round of reformsThe focus now, according to Subramanian, needs to shift towards reforms that can help India realise its Viksit Bharat 2047 ambition. He said the next phase should include reforms in manufacturing, factor markets, the bureaucracy and the judiciary, along with measures to improve the ease of doing business and ease of financing. Of these, he highlighted ease of doing business and ease of financing as particularly important. Manufacturing will need reforms that reduce the costs faced by companies across land, labour, capital, power and logistics.

Increasing the scale of manufacturing firms is also important because larger scale can help reduce average costs. But regulation can itself prevent companies from reaching that scale." One of the key inhibitors to scale is regulation itself," Subramanian said. He described these changes as part of the second generation of reforms needed in factor markets. Why manufacturing needs more than investmentSubramanian's argument on manufacturing goes beyond simply increasing production.

The costs faced by companies across land, labour, capital, power and logistics affect their ability to compete and expand. That makes factor-market reform important to the broader manufacturing push. His focus on ease of doing business and ease of financing also reflects the same concern: companies need an environment in which they can operate, access finance and expand efficiently. Subramanian said he has discussed these reforms in detail in his book India@100, including reforms relating to manufacturing, factor markets, the bureaucracy, the judiciary and the processes needed to improve the ease of doing business and financing.

Human capital becomes more important with AIManufacturing and business reforms are not the only priorities. Subramanian also highlighted human capital, particularly as artificial intelligence becomes more important. He said the quality of human capital will become increasingly important with the arrival of AI, making it another area that needs policy attention. This adds a longer-term dimension to the reform agenda: improving the environment for businesses while also ensuring that the economy has the human capital needed as technology changes.

Reform also requires political communicationFor Subramanian, implementing reforms in a democracy requires more than having a clear policy agenda. He identified two political requirements: clarity of thought and conviction among political leaders, and the ability to explain to people why a reform is necessary. He said Modi had demonstrated both, particularly in communicating the need for reforms in simple terms. That communication, he argued, matters because reforms can be difficult to undertake unless people understand why they are needed.

Subramanian's central message for the next phase is therefore clear: the infrastructure and public-goods push needs to be followed by deeper reforms that allow businesses to achieve scale, improve efficiency and access financing, while strengthening human capital. The success of that next phase, he said, will be important if India is to realise the economic potential he sees ahead." If basically the Prime Minister doesn't do these reforms, I think we may not be able to achieve the kind of potential that India has," he said.