According to NITI Aayog and corroborated by IMF projections, India has surpassed Japan to become the world’s fourth-largest economy with a GDP size of USD 4.18 trillion. India remains the world’s fastest-growing major economy and is poised to overtake Germany to become third-largest economy by 2030, with a projected GDP of USD 7.3 trillion. The US remains the world’s largest economy, followed by China.
Key Highlights
- India’s Real GDP Growth (Q2 FY 2025-26):
- 8.2% in July–September quarter
- Up from 7.8% in Q1 and 7.4% in Q4 of last fiscal
- Growth driven primarily by:
- Strong domestic demand
- Robust private consumption
- GDP size: USD 4.18 trillion → surpasses Japan
- India expected to:
- Maintain over 6% growth in the next two years
- Reach USD 5.58 trillion by 2028
- Overtake Germany to become 3rd-largest economy
IMF & Global Growth Projections
IMF World Economic Outlook
- India projected GDP (2025): USD 4,187 bn → above Japan’s USD 4,186 bn
- Growth outlook for India remains strongest among major economies
Germany
- 0% growth in 2025, 0.9% in 2026
- Expected to be hit by global trade tensions
- GDP projected USD 5.25 trillion (2028)
Japan
- Growth stagnating at 0.6% (2025–26)
United States
- GDP 2025: USD 30.5 trillion
- Growth slowing to 1.8% (2025) and 1.7% (2026)
Euro Area
- 0.8% growth in 2025, 1.2% in 2026
United Kingdom
- 1.1% (2025) and 1.4% (2026)
Spain
- 2.5% (2025) but moderating to 1.8% (2026)
Why is India’s Economy Booming?
Growth supported by:
- Strong domestic demand and private consumption
- Goldilocks phase – high growth with moderate inflation
- Strong corporate balance sheets
- Steady credit expansion
- Structural and economic reforms
- Policy stability and investment-led growth
- Improving export performance
- Benign financial conditions
Government outlook highlights:
- India is well-positioned to sustain growth momentum
- Long-term goal: High-middle-income status by 2047
Economic Challenges Ahead
Despite strong macro-growth:
- Per-capita income remains low
- India (2024): USD 2,694
- Japan: USD 32,487
- Germany: USD 56,103
- Employment challenge
- Over 25% of population aged 10–26
- Need for high-quality job creation
- Income inequality and regional disparities
- Pressure on:
- Productivity growth
- Skilling and education
- Urbanisation and infrastructure capacity
Global Growth Outlook (International Agency Projections)
- World Bank: 6.5% growth (2026)
- Moody’s: 6.4% (2026), 6.5% (2027)
- IMF: 6.6% (2025), 6.2% (2026)
- OECD: 6.7% (2025), 6.2% (2026)
- S&P: 6.5% (current FY), 6.7% (next FY)
- ADB: 7.2% (2025)
- Fitch: 7.4% (FY26) – driven by consumer demand
Common assessment: India will remain the fastest-growing major economy globally.
Macro-Stability Indicators
- Inflation: below lower tolerance threshold
- Unemployment: declining
- Exports: improving trend
- Credit Growth: strong to commercial sector
- Urban consumption: strengthening
- Financial conditions: supportive and stable
Significance
- Reinforces India’s position as a global growth engine
- Enhances investor confidence and capital inflows
- Strengthens India’s role in:
- Global supply chains
- Emerging-market leadership
- Strategic trade and economic diplomacy
- Supports long-term vision of:
- Sustainable growth
- Social progress
- Structural transformation
- Viksit Bharat @ 2047