India overtakes Japan to become world’s fourth-largest economy; to surpass Germany by 2028

New Delhi: India has overtaken Japan to become the world’s fourth-largest economy, with a gross domestic product (GDP) valued at USD 4.18 trillion, the government has said, citing strong growth momentum and robust domestic demand.

According to an official release, India is now the fastest-growing major economy globally and is on course to surpass Germany to claim third place within the next two-and-a-half to three years. The government projects the economy to reach USD 7.3 trillion by 2030. The United States remains the world’s largest economy, followed by China.

Economic growth accelerated to a six-quarter high in the second quarter of the 2025–26 financial year, with real GDP expanding by 8.2 per cent. This compares with growth of 7.8 per cent in the first quarter and 7.4 per cent in the final quarter of the previous fiscal year. The government said the performance underlined India’s resilience despite ongoing global trade uncertainties.

The expansion has been driven largely by domestic factors, particularly strong private consumption. Urban demand has continued to strengthen, while financial conditions have remained supportive, with healthy credit flows to the commercial sector.

International institutions have echoed the government’s optimism. The World Bank has projected growth of 6.5 per cent in 2026, while Moody’s expects India to remain the fastest-growing G20 economy, forecasting growth of 6.4 per cent in 2026 and 6.5 per cent in 2027. The International Monetary Fund has raised its outlook to 6.6 per cent for 2025 and 6.2 per cent for 2026, and the OECD forecasts growth of 6.7 per cent in 2025 and 6.2 per cent in 2026.

S&P Global anticipates growth of 6.5 per cent in the current fiscal year and 6.7 per cent in the next. The Asian Development Bank has lifted its 2025 forecast to 7.2 per cent, while Fitch has raised its projection for 2025–26 to 7.4 per cent, citing stronger consumer demand.

According to the release, ”India is among the world's fastest-growing major economies and is well-positioned to sustain this momentum. With the ambition of attaining high middle-income status by 2047- the centenary year of its independence, the country is building on strong foundations of economic growth, structural reforms, and social progress," the government said."

The government said  inflation remains below the lower tolerance threshold, unemployment is declining, and export performance is improving. It added that India is well placed to sustain its growth trajectory as it works towards achieving high middle-income status by 2047, the centenary year of its independence.

PTI