India overtakes Japan to become world’s fourth-largest economy 

India has surpassed Japan to become the world’s fourth-largest economy, the government announced on Tuesday, marking a significant milestone in the country’s economic rise.

One of the fastest-growing major economies globally, India is projected to overtake Germany to become the third-largest economy by 2030, with its gross domestic product (GDP) estimated at USD 7.3 trillion, the government said.

“With the ambition of attaining high middle-income status by 2047—the centenary year of India’s independence—the country is building on strong foundations of economic growth, structural reforms and social progress,” the government said in a release.

The statement noted that India’s GDP expanded to a six-quarter high in the second quarter of FY 2025–26, reflecting the economy’s resilience amid persistent global trade uncertainties. Strong domestic demand, led by robust private consumption, played a key role in supporting growth.

High-frequency indicators point to sustained economic momentum. Inflation remains below the lower tolerance threshold, unemployment is on a declining trend, export performance continues to improve, and credit flows to the commercial sector remain strong. Urban consumption has further bolstered demand conditions.

India’s real GDP grew 8.2% in Q2 FY 2025–26, up from 7.8% in the previous quarter and 7.4% in Q4 FY 2024–25, driven by resilient domestic demand. Real Gross Value Added (GVA) expanded by 8.1%, supported by strong performance in the industrial and services sectors.

The Reserve Bank of India has revised its GDP growth forecast for FY 2025–26 upward to 7.3%, from an earlier estimate of 6.8%. Growth is being supported by robust demand, income tax and GST rationalisation, softer crude oil prices, front-loaded government capital expenditure, and favourable monetary and financial conditions.

Looking ahead, domestic drivers—including favourable agricultural prospects, low inflation, GST rationalisation gains, and strong corporate and financial institution balance sheets—along with supportive monetary conditions, are expected to sustain economic activity. On the external front, strong services exports and the swift conclusion of trade and investment negotiations provide additional upside potential. Ongoing structural reforms are expected to further strengthen growth prospects.

The government described the current macroeconomic environment as a rare “Goldilocks period” characterised by high growth and low inflation.