India’s Economic Metamorphosis: Gen Z’s Playbook, Nobel Insights, and the Logic of Limits
Inside a buzzing classroom at Woxsen University, I introduced Herbert Simon’s idea of bounded rationality; the notion that humans don’t seek perfect decisions, only workable ones. The students immediately connected and elevated the same to the Indian Economy.
Inside a buzzing classroom at the School of Business at Woxsen University, Hyderabad, I introduced the concept of bounded rationality. Herbert Simon’s idea that people make “satisficing” decisions, not perfect ones, because information is limited, time is short, and minds are human. One student laughed, “Ma’am, that’s exactly how we chose startup pivots: fast and half-blind.” Another added, “It’s how I chose my optional papers. Worked out fine.” I smiled. Another muttered, “This sounds like my dating life.” And I thought: this sounds like India’s economy. Because this wasn’t just academic banter, it was India’s economic strategy in real time. If we look closely, India in 2025 is making decisions under constraints, just like my students. And it’s doing surprisingly well. Let’s start with the numbers. India’s real GDP grew at 6.49% in 2024–25 and is projected to grow between 6.3% and 6.8% in 2025–26, depending on which economist you ask.[1] Inflation? Down to 1.61% in July 2025, from 2.1% in June, 2025. That’s not just resilience; it’s a masterclass in satisficing. And now, the International Monetary Fund has added its voice to the chorus: India’s growth forecast for 2025 has been revised upward to 6.6%, citing strong domestic demand, robust private consumption, and reform-driven momentum. Even amid global headwinds and tariff tensions, India’s macroeconomic fundamentals are defying gravity!
India isn’t optimizing every variable. It’s navigating trade wars, global supply chain shifts, and geopolitical curveballs. The US-China tariff rhetoric? That’s bounded rationality in action: make the best decision with what you’ve got and move fast. In my classroom, we talk about game theory. India’s industrial policy is playing a strategic game: PLI schemes, infrastructure push, and sectoral targeting. It’s not perfect, but it’s smart. The country is hedging its bets, diversifying supply chains, and wooing global investors with a wink and a spreadsheet. And behavioural economics? Oh, it’s everywhere. Consumers are spending more because inflation is comparatively low. Investors are bullish because the narrative is strong. The availability heuristic is working in India’s favour: people see growth, and they believe in it.
But here’s the twist: bounded rationality isn’t just shaping India’s macroeconomics, it’s reshaping how we learn, teach, and adapt. Because in the age of AI, creative destruction isn’t a dramatic rupture anymore. It’s a quiet, relentless churn. The old Schumpeterian cycles of innovation and obsolescence have compressed. What used to take decades now takes quarters or sometimes just few weeks!
And this is where the Nobel laureates enter the syllabus. Philippe Aghion, Peter Howitt, and Joel Mokyr architects of innovation economics have shown us that growth isn’t linear, it’s recombinant. Their work on creative destruction reveals that economies flourish when old paradigms are dismantled and new ones emerge. AI, in this context, is not just a tool; it’s a catalyst. It accelerates obsolescence, shortens product cycles, and demands perpetual reinvention. India’s economic choreography echoes their insights: a dance of disruption and adaptation. The PLI schemes are not just incentives they’re instruments of endogenous growth. The infrastructure push isn’t just Keynesian, it’s Schumpeterian. And Gen Z? They’re not just learners; they’re latent innovators, embodying Mokyr’s cultural capital of curiosity.
Faculty and students alike must tighten their belts, not for austerity, but for agility. The shelf life of knowledge is shrinking. A new framework, a fresh tool, a breakthrough model? It’s relevant today, outdated tomorrow. We’re no longer curating timeless wisdom; we’re surfing waves of transient insight. And the students, especially Gen Z, aren’t just riding those waves. They’re reshaping them. These curious minds breed on invention not imitation. They’re not asking “What’s the right answer?” but “What’s the next question?” They’re not waiting for the syllabus to catch up, they’re already building the next module.
This isn’t just a pedagogical shift. It’s a competency crisis[2]. Psychology calls it the expertise paradox[3]: the deeper your mastery, the harder it is to unlearn. In a world where yesterday’s best practice is today’s blind spot, expertise must be fluid. The real skill is reconfiguration now! We need to teach students and even ourselves that knowing is temporary, but learning is perpetual.
So, what’s the real lesson?
That India’s economy, like its classrooms, is boundedly rational and brilliantly adaptive. That momentum beats perfection. That in the age of AI, the most valuable skill isn’t mastery. It’s metamorphosis.
Sources:
IMF Country Page for India
World Economic Outlook Database, April 2025 – IMF
[2] Eraut, M. (2003). The many meanings of theory and practice. In C. Day & J. Sachs (Eds.), International handbook on the continuing professional development of teachers (pp. 263–288). Open University Press.
[3] Hoffman, R. R., Ward, P., Feltovich, P. J., DiBello, L., Fiore, S. M., & Andrews, D. (2014). Accelerated expertise: Training for high proficiency in a complex world. Psychology Press.