India Becomes the World’s 4th Largest Economy, Surpasses Japan

India has reached a historic economic milestone at the end of this year. In 2025, India surpassed Japan to become the world’s fourth-largest economy. This achievement reflects strong growth, resilient domestic demand, and sustained structural reforms. With this growing and steady approach the nation will enter with the new year with more economic growth.

What Is the News About?

• According to a government release, India has overtaken Japan in nominal GDP terms.
• India’s economy is now valued at $4.18 trillion, placing it behind only the United States, China, and Germany.

India’s Current Global Economic Ranking

India now ranks as,

• 4th largest economy globally
• Fastest-growing major economy in the world
• The government expects India to surpass Germany and become the 3rd largest economy by 2030, with a projected GDP of $7.3 trillion.

Key Growth Numbers Behind the Milestone

India’s strong macroeconomic performance has driven this rise.

Real GDP growth trends

• Q4 of last fiscal: 7.4%
• Q1 of 2025-26: 7.8%
• Q2 of 2025-26: 8.2% (six-quarter high)

This shows accelerating growth momentum despite global economic uncertainties.

Drivers of India’s Economic Growth

• The growth surge has been largely driven by domestic factors.
• Private consumption has played a central role, supported by rising incomes and stable inflation.
• Strong credit flow to businesses has boosted investment activity.
• Government-led reforms have improved ease of doing business and policy stability.

Global Recognition of India’s Growth Story

Several international institutions have expressed confidence in India’s outlook.

Growth projections include,

• World Bank: 6.5% growth in 2026
• IMF: 6.6% in 2025 and 6.2% in 2026
• OECD: 6.7% in 2025
• ADB: 7.2% growth forecast for 2025
• Fitch: 7.4% growth for FY26

These projections reinforce India’s position as a global growth engine.

Why Surpassing Japan Is Significant

• Japan has long been one of the world’s largest economies.
• India overtaking Japan signals a shift in global economic power towards emerging economies.
• It reflects India’s demographic advantage, expanding consumer base, and reform-driven growth.
• It also strengthens India’s voice in global economic governance forums.

Key Takeaways

• India’s GDP stands at $4.18 trillion
• India has overtaken Japan in global GDP ranking
• Real GDP growth reached 8.2% in Q2 2025–26
• India is the fastest-growing major economy
• Expected to surpass Germany by 2030

Question

Q. India recently became the world’s fourth largest economy by overtaking which country?

A. Germany
B. United Kingdom
C. Japan
D. France