India Becomes World’s 4th Largest Economy

● India has surpassed Japan to become the world’s fourth largest economy. India’s economy is now valued at around USD 4.18 trillion.

● This achievement places India behind only the United States, China and Germany.

● India has moved from being the world’s tenth largest economy in 2014 to fourth place, reflecting sustained high growth, macroeconomic resilience and increasing global relevance.

● India’s rise has been driven by its status as the world’s fastest growing major economy and the only country projected to grow over 6% annually for the next two years. In FY 2025-26, real GDP growth of India accelerated to 8.2% in the second quarter. This growth is largely driven by strong domestic demand, even when global trade is slowing.

● The introduction of the Goods and Services Tax created a unified national market and improved tax compliance, while the Insolvency and Bankruptcy Code helped clean up stressed assets and strengthened the banking system. Digitalisation, manufacturing incentives, rationalisation of taxes and sustained government capital expenditure have further reinforced growth momentum. Political stability at the Centre has also boosted investor confidence, positioning India as a key destination for global investment.

● India is poised to overtake Germany to become the world’s third largest economy by 2030, with projections suggesting GDP could reach around USD 7.3 trillion by 2030.

● Despite being the 4th largest economy, India’s per capita income remains low. The per capita GDP of India is around USD 2,700. This is because India has the world’s largest population. Japan’s per capita income is over USD 32,000 and Germany’s per capita income is over USD 56,000. This highlights that economy size does not automatically mean higher living standards.