India Ascends to World's 4th Largest Economy, Surpassing Japan
India has overtaken Japan to become the world's fourth-largest economy, with its economy now valued at USD 4 trillion, NITI Aayog CEO BVR Subrahmanyam announced. Citing IMF data, he highlighted this significant milestone during a press conference following the 10th NITI Aayog Governing Council Meeting. Subrahmanyam also noted that the overall geopolitical and economic environment is currently favorable for India's continued growth and development on the global stage.
Unpacked:
India’s rapid economic growth, averaging around 6.5% annually, a large and expanding consumer market, increased government spending, and favorable demographics have contributed to its rise. Additionally, global conditions like slower growth in other major economies, particularly Japan and China, have helped India move up the ranks.
Key challenges include providing enough productive jobs for its growing workforce, managing inflation, ensuring equitable development across regions, potential external trade uncertainties, and balancing between market-oriented reforms and political pressures for populist policies.
The government has implemented tax reductions, especially for the middle class, to boost consumer spending, increased public investment, and promoted digitalization and manufacturing. These measures have injected disposable income into the economy and fostered productivity and efficiency gains.
Projections suggest India’s economy will grow at 6.2–6.5% annually, potentially becoming the world’s third-largest economy by 2027 and reaching a nominal GDP of over USD 6 trillion by 2030, driven by manufacturing, services exports, and continued reforms.