India overtook Japan to become the world’s fourth-largest economy in 2025, with a $4.19 trillion GDP, driven by robust 6.2% growth, infrastructure, and reforms. Despite low per capita income, India aims for third by 2028 and a $30 trillion economy by 2047 under Viksit Bharat, though global uncertainties pose challenges.
Copyright infringement not intended
Picture Courtesy: INDIAN EXPRESS
India surpasses Japan to become the world's fourth-largest economy.
India has achieved a major milestone by overtaking Japan to become the world’s fourth-largest economy in 2025, according to the International Monetary Fund (IMF) and NITI Aayog CEO BVR Subrahmanyam.
Indian economy, measured by its nominal GDP (the total value of goods and services produced), is now worth $4.19 trillion, slightly more than Japan’s $4.186 trillion. Only the United States, China, and Germany have larger economies.
|
India’s GDP has doubled from $2.1 trillion in 2014 to over $4 trillion in 2025. The per capita income (average income per person) also doubled, rising from $1,438 in 2013-14 to $2,880 in 2025. While this is a big jump, India’s per capita income is still much lower than Japan’s $33400. |
NITI Aayog predicts India will overtake Germany to become the third-largest economy by 2028, with a GDP of $5.58 trillion compared to Germany’s $5.25 trillion. The IMF supports this, forecasting India will hit $5 trillion by 2027.
Strong Economic Growth => India is the world’s fastest-growing major economy. The IMF predicts India will grow at 6.2% in 2025 and 6.3% in 2026, far above the global average of 2.8% in 2025 and 3% in 2026. This growth comes from strong private consumption, especially in rural areas.
Favorable Conditions => Niti Aayog says the global economic and geopolitical environment favors India. Policies like Digital India and Atmanirbhar Bharat (self-reliant India) have boosted growth.
Japan’s Challenges => Japan’s economy faces issues like a weak yen and slow growth. The IMF notes Japan’s GDP growth is modest compared to India’s rapid expansion.
Policy Reforms => Indian government has investment on infrastructure development, manufacturing, and digital innovation, helped the economic Growth.
Low Per Capita Income => India’s per capita GDP of $2,880 (or about $2,400 by some estimates) is low compared to Japan’s or other developed nations. Experts say it could take 22 years to match Japan’s current per capita GDP if Japan’s economy stagnates.
Global Uncertainty => The IMF notes that global trade tensions, like U.S. tariffs under President Donald Trump, could slow India’s growth. The IMF lowered India’s 2025 growth forecast from 6.5% to 6.2% due to these issues.
Data Concerns => Some experts question the reliability of GDP data. Final GDP figures take two years to confirm, so India’s 2025 ranking isn’t certain until 2027.
Sustained Growth Needs => To reach $30 trillion by 2047, India needs 8% annual growth and higher capital formation (investment in infrastructure and industries), which is currently at 24% but should rise to 32%.
"Viksit Bharat @ 2047" initiative aims to transform the nation into a developed country by 2047, coinciding with the centenary of Indian independence. This vision encompasses becoming a $30 trillion economy with a per capita income of $18,000.
Six Key Building Blocks for Development
To achieve the Viksit Bharat vision, India needs to maintain an average growth rate of 8% over the next two decades. This sustained growth will enable:
Must Read Articles:
Budgeting For a Gender-Inclusive 'Vikshit Bharat'
Source:
|
PRACTICE QUESTION Q. "India ranks as the 4th largest economy globally, yet its per capita income remains abysmally low. Analyze the structural factors contributing to this paradox." 250 words |
© 2025 iasgyan. All right reserved
