India Surpasses Japan To Become the World’s 4th Largest Economy

India has achieved a major economic milestone, officially overtaking Japan to become the world’s fourth-largest economy. According to the government, India’s GDP now stands at USD 4.18 trillion, supported by strong growth momentum and resilient domestic demand.

"With GDP valued at USD 4.18 trillion, India has surpassed Japan to become the world's fourth-largest economy, and is poised to displace Germany from the third rank in the next 2.5 to 3 years with a projected GDP of USD 7.3 trillion by 2030," according to a government release providing a snapshot of reforms in 2025.

Fastest-Growing Major Economy in the World

India continues to outperform global peers despite challenging global trade conditions. The economy has been expanding faster than most large nations, driven by domestic consumption, reforms, and investment momentum.

"With continuing good growth numbers, India is also the world's fastest-growing major economy."

GDP Growth Hits Multi-Quarter High

India’s real GDP growth remained strong through FY 2025-26.

"India's real GDP grew 8.2 per cent in the second quarter of 2025-26, up from 7.8 per cent in the first quarter and 7.4 per cent in the fourth quarter of the last fiscal."

The government highlighted that growth in Q2 reached a six-quarter high, underscoring economic resilience amid global uncertainty.

"The growth momentum further surprised on the upside, with GDP expanding to a six-quarter high in Q2 of 2025-26, reflecting India's resilience amid persistent global trade uncertainties," it said.
"Domestic drivers, led by robust private consumption, played a central role in supporting this expansion."

Strong Forecasts from Global Financial Institutions

International organizations have reaffirmed confidence in India’s long-term growth trajectory.

"The World Bank has projected a 6.5 per cent growth in 2026; Moody's expects India to remain the fastest-growing G20 economy with a growth of 6.4 per cent in 2026 and 6.5 per cent in 2027."

"The IMF has raised its projections to 6.6 per cent for 2025 and 6.2 per cent for 2026; the OECD forecasts 6.7 per cent growth in 2025 and 6.2 per cent in 2026."

"Also, S&P anticipates a growth of 6.5 per cent in the current fiscal and 6.7 per cent in the next; the Asian Development Bank has lifted its 2025 forecast to 7.2 per cent; and Fitch has raised its FY26 projection to 7.4 per cent on stronger consumer demand."

Path Toward High Middle-Income Status

India’s structural reforms, digital transformation, and infrastructure push are seen as crucial pillars supporting future growth.

"India is among the world's fastest-growing major economies and is well-positioned to sustain this momentum. With the ambition of attaining high middle-income status by 2047- the centenary year of its independence, the country is building on strong foundations of economic growth, structural reforms, and social progress," the government said.

Inflation, Employment, and Trade Show Positive Trends

The government report highlights improving macroeconomic stability:

"The release also highlighted that inflation remains below the lower tolerance threshold, unemployment is on a declining trajectory, and export performance continues to improve."

Credit Growth and Urban Demand Strengthen Outlook

Bank credit growth continues to support business expansion, while consumption remains a major driver of economic performance.

"Furthermore, financial conditions have stayed benign, with strong credit flows to the commercial sector, while demand conditions remain firm, supported by a further strengthening of urban consumption."