India Emerges as World’s Fourth-Largest Economy, Overtakes Japan

India has climbed to the position of the world’s fourth-largest economy, overtaking Japan, with its gross domestic product reaching USD 4.18 trillion, the government said, underscoring the country’s sustained growth momentum despite global economic uncertainties.

According to an official release outlining key reforms and economic indicators for 2025, India is now behind only the United States, China and Germany, and is expected to surpass Germany to become the world’s third-largest economy within the next 2.5 to 3 years. Projections indicate India’s GDP could rise to USD 7.3 trillion by 2030.

India’s growth trajectory has remained strong in the current fiscal year, with real GDP expanding by 8.2 per cent in the second quarter of 2025–26. This marks an acceleration from 7.8 per cent growth in the first quarter and 7.4 per cent in the fourth quarter of the previous fiscal, making it the fastest-growing major economy globally.

The government noted that economic growth in the second quarter touched a six-quarter high, reflecting resilience amid ongoing global trade and geopolitical challenges. Domestic demand, particularly robust private consumption, continued to be the primary driver of expansion.

Global institutions have also expressed confidence in India’s outlook. The World Bank has projected 6.5 per cent growth in 2026, while Moody’s expects India to remain the fastest-growing G20 economy, with growth of 6.4 per cent in 2026 and 6.5 per cent in 2027. The International Monetary Fund has raised its growth forecast to 6.6 per cent for 2025 and 6.2 per cent for 2026, while the OECD expects growth of 6.7 per cent in 2025 and 6.2 per cent in 2026.

Other agencies have echoed similar optimism, with S&P projecting growth of 6.5 per cent in the current fiscal and 6.7 per cent next year, the Asian Development Bank revising its 2025 estimate to 7.2 per cent, and Fitch raising its FY26 forecast to 7.4 per cent, citing strong consumer demand.

The government said India remains well-positioned to sustain its growth momentum as it works towards the goal of becoming a high middle-income country by 2047, the centenary year of Independence. It added that inflation is currently below the lower tolerance threshold, unemployment levels are easing, and export performance is improving.

Financial conditions have also remained supportive, with steady credit growth to the commercial sector and firm demand, aided by strengthening urban consumption, the release said.

(Source: PTI)