India becomes world’s fourth-largest economy, surpassing Japan: Govt

India has overtaken Japan to become the world’s fourth-largest economy, with a GDP of USD 4.18 trillion, the government said, underlining the country’s strong growth momentum despite global uncertainties. 

With sustained expansion, India is now poised to surpass Germany to claim the third spot by 2030.

According to a government release outlining key reforms in 2025, India’s economy is projected to grow to USD 7.3 trillion by the end of the decade. The United States remains the world’s largest economy, followed by China in second place.

Growth momentum defies global headwinds

India continues to be the fastest-growing major economy globally. Real GDP growth rose to 8.2 per cent in the second quarter of 2025-26, compared to 7.8 per cent in the first quarter and 7.4 per cent in the final quarter of the previous fiscal. This marked a six-quarter high, reflecting resilience amid persistent global trade challenges.

The government said domestic drivers, particularly robust private consumption, played a central role in supporting growth. International agencies have also echoed optimism. The World Bank projects 6.5 per cent growth in 2026, while the IMF has raised its forecast to 6.6 per cent for 2025. Moody’s expects India to remain the fastest-growing G20 economy.

The release further highlighted easing inflation, declining unemployment, improving exports, and strong credit flows, supported by firm demand and strengthening urban consumption.