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In 1993, South Africa’s economy was more than one third the size of India’s. Today it is only about one tenth of the size.

India’s economy has grown by an average of 6.3% a year since 1993. South Africa’s economy has grown by an average of only 2.2% a year over the same period.

The chart below shows the growth in India and South Africa’s overall GDPs since 1993. It also shows the size of India’s economy as a multiple of South Africa’s economy and how that has grown.

While South Africa did experience a period of relatively strong growth from the mid-1990s until 2008, since then its economy has largely stagnated, while India has continued expanding rapidly.

The difference is also evident in growth in per capita incomes.

India’s GDP per capita in real terms has increased by nearly 350%, rising from $563 in 1993 to $2 523 in 2025. South Africa’s GDP per capita increased by only 36%, from $4 194 to $5 173.

The chart below shows the trend in GDP per capita in South Africa and India between 1993 and 2025.

The average South African remains significantly richer than the average Indian. But the trend is clear. Indians are rapidly becoming richer, while South African incomes have remained relatively flat.

At their current rates of economic and population growth India would overtake South Africa’s per capita GDP in or around 2042.

The scale of India’s growth is now extraordinary. Given the size of its economy and its current growth rate, India adds the equivalent of an entire South African economy to its GDP roughly every 18 months.

The roots of this divergence can be traced back to the economic crisis India faced in 1991.

India’s foreign exchange reserves were almost exhausted and could barely cover two weeks of imports. The government was forced to airlift nearly 50 tonnes of its gold reserves to the United Kingdom and Switzerland as security for emergency financing.

The crisis followed decades in which the Indian economy had been tightly controlled and regulated through a system known as the Licence Raj. Businesses required government permits for a wide range of economic activities, restricting investment, competition, and entrepreneurship.

Under finance minister Manmohan Singh, who later became prime minister, India began a programme of major economic reform following the 1991 crisis. It dismantled much of the Licence Raj, devalued the rupee, liberalised trade, and removed restrictions on foreign investment.

These reforms unleashed decades of economic growth.

India’s success did not require abandoning democracy. The country continued holding regular elections and experienced several peaceful transfers of power between political parties.

Another key reason for India’s rapid economic growth is how much the country spent on building infrastructure. Between 1993 and 2025, India’s average annual fixed investment rate as a proportion of GDP was 29.7%, while South Africa’s was 16.1%. (Fixed investment is a vital economic indicator as it drives economic growth by expanding productive capacity, creating jobs, and funding infrastructure, machinery, and other assets needed for future economic activity.)

India became richer by deregulating its economy, opening it to investment and making it easier for people to work, trade, and start businesses, and building and maintaining infrastructure.

South Africa, meanwhile, went the other way. It implemented policies that discouraged investment (particularly since the turn of the century), while also increasing regulation of the economy and failing to maintain (but also build) infrastructure.

But South Africa’s relative decline is not inevitable. India’s experience shows how quickly a country’s economic prospects can change when it chooses reform over stagnation.