India has officially become the fourth-largest economy in the world in a landmark milestone that demonstrates its increasing power on the global economic stage. NITI Aayog CEO B.V.R. Subrahmanyam confirmed this on Saturday, May 24, following data released by the International Monetary Fund (IMF). The news also conveys India's impressive rate of growth.
After the tenth Governing Council Meeting of NITI Aayog, Subrahmanyam stated to reporters, "We are the fourth largest economy as I speak. We are a USD 4 trillion economy as I speak, and this is not my data; this is IMF data. India today is larger than Japan." This news marks India's return to the fourth-largest economy from 2024, when it was the fifth-largest economy.
The IMF's World Economic Outlook forecasted India's nominal GDP of USD 4.187 trillion for FY26, slightly higher than Japan's predicted GDP of USD 4.186 trillion. Of course, it is a small margin, but one that should continue to grow as India sustains a high growth trajectory.
The IMF has now described India as the fastest-growing major economy in the world, with growth of more than 6% for the next couple of years on the cards. India's growth is driven by strong domestic consumption, public sector capital expenditure, and structural reforms, which NITI Aayog CEO predicts will lead to Germany's relegation from the third spot in the rankings.
Considering that the IMF forecasts Germany's growth will be zero in 2025, India's rise to the third position is looking increasingly feasible.
Japan has been facing several economic headwinds, such as an aging population, persistent deflation, and exposure to global trade conflicts. Even if it is still a major economic player, slower growth estimates allow the faster-growing India to surpass Japan in terms of nominal GDP figures.
Subrahmanyam also said that India's per capita income has gone up from USD 1,438 in 2013-14 to USD 2,880 in 2025, signifying broad economic upliftment, with caveats about inequality. The ideal target of NITI Aayog's approach paper "Viksit Rajya For Viksit Bharat @ 2047" is that India is a US$ 30 trillion economy and a high-income country when it celebrates 100 years of independence.
This achievement in our economy measures more than just numbers – it indicates a larger economic picture with India's demographic dividend, increasing digital transition, and growing positions in both manufacturing and services.
While there will continue to be contradictions of development, from inclusive growth to growing income inequality, and challenges from infrastructure gaps to fiscal space, nevertheless, India remains well-placed to build on its current global position as only the 4th largest economy in the world behind the United States, China, and Germany.