India Overtakes Japan to Become World’s Fourth-Largest Economy, Eyes Germany Next

India has officially overtaken Japan to become the world’s fourth-largest economy, with its gross domestic product (GDP) reaching an estimated USD 4.18 trillion, the government said on Tuesday. With sustained high growth and favourable global projections, India is now on track to surpass Germany and claim the third position by the end of this decade.

According to the government, if current trends continue, India’s economy could expand to around USD 7.3 trillion by 2030, placing it behind only the United States and China. The US remains the world’s largest economy, followed by China in second place and Germany currently at third.

Growth Momentum Accelerates

India’s rise in global economic rankings has been driven by consistently strong growth. Official data shows that real GDP grew by 8.2% in the second quarter of the 2025–26 financial year, marking a six-quarter high. This follows growth of 7.8% in the first quarter and 7.4% in the final quarter of the previous fiscal year.

The government said the latest figures highlight India’s resilience at a time when many economies are grappling with slowing growth, geopolitical uncertainty and disruptions to global trade.

“Despite persistent global headwinds, India’s growth momentum has surprised on the upside,” the government noted in a release summarising key economic reforms and performance in 2025.

Domestic Demand Leads the Expansion

Officials attributed much of the recent growth to strong domestic drivers, particularly robust private consumption. Urban demand has continued to strengthen, supported by rising incomes, improved employment conditions and stable financial markets.

The release also pointed to healthy credit flows to the commercial sector, benign financial conditions and firm demand as key factors sustaining expansion. These trends, it said, have helped offset external uncertainties and kept investment activity on track.

Global Agencies Back India’s Outlook

International financial institutions and rating agencies have echoed the government’s optimism about India’s medium-term prospects.

• The World Bank has projected India’s growth at 6.5% in 2026.

• Moody’s expects India to remain the fastest-growing economy in the G20, forecasting growth of 6.4% in 2026 and 6.5% in 2027.

• The International Monetary Fund (IMF) has raised its estimates to 6.6% for 2025 and 6.2% for 2026.

• The Organisation for Economic Co-operation and Development (OECD) sees growth of 6.7% in 2025 and 6.2% in 2026.

• S&P Global anticipates growth of 6.5% in the current fiscal year and 6.7% in the next.

• The Asian Development Bank has lifted its 2025 forecast to 7.2%.

• Fitch Ratings has raised its FY26 growth projection to 7.4%, citing stronger consumer demand.

These projections collectively place India well ahead of other major economies in terms of growth rates.

Macroeconomic Stability and Reforms

Beyond headline growth, the government highlighted improvements in key macroeconomic indicators. Inflation, it said, remains below the lower tolerance threshold set by the central bank, while unemployment is on a declining path. Export performance has also shown steady improvement, adding support to overall economic activity.

Officials credited structural reforms, infrastructure investment and targeted social programmes for creating a strong foundation for long-term growth.

Looking Ahead to 2047

The government reiterated its long-term goal of transforming India into a high middle-income country by 2047, the centenary year of independence. Achieving that ambition, it said, will depend on sustaining growth, deepening reforms, boosting productivity and ensuring that economic gains translate into broader social progress.

“India is among the world’s fastest-growing major economies and is well-positioned to sustain this momentum,” the statement said, adding that the country’s expanding economic weight will also have growing implications for global trade, investment flows and geopolitics in the coming years.