Economy
India surpasses Japan to become 4th largest economy — set to overtake Germany by 2030
New Delhi/IBNS: India has surpassed Japan to become the fourth largest economy in the world, the government announced on Tuesday.
One of the world’s fastest-growing major economies, India is projected to overtake Germany and become the third largest economy globally, with a GDP of USD 7.3 trillion by 2030, the government said.
“With the ambition of attaining high middle-income status by 2047, the centenary year of independence, the country is building on strong foundations of economic growth, structural reforms, and social progress,” the government said in a release.
The statement highlighted that India’s GDP expanded to a six-quarter high in Q2 of 2025-26, reflecting the economy’s resilience amid persistent global trade uncertainties. Domestic demand, led by robust private consumption, played a central role in supporting this growth.
High-frequency indicators show sustained economic activity: inflation remains below the lower tolerance threshold, unemployment is declining, export performance continues to improve, and credit flows to the commercial sector are strong. Urban consumption has further supported 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 of 2024-25, driven by resilient domestic demand. Real Gross Value Added (GVA) expanded by 8.1%, catalyzed by buoyant industrial and services sectors.
The RBI revised India’s GDP growth forecast for FY 2025-26 upwards to 7.3%, from the earlier estimate of 6.8%. Domestic growth is supported by robust demand, income tax and GST rationalisation, softer crude oil prices, front-loaded government capital expenditure (CAPEX), and favorable monetary and financial conditions.
Looking ahead, domestic drivers such as favorable agricultural prospects, GST rationalisation effects, low inflation, and strong corporate and financial institution balance sheets, coupled with supportive monetary conditions, are expected to bolster economic activity. External factors like strong services exports and swift conclusion of trade and investment negotiations add upside potential. Ongoing reforms are likely to further enable growth.
The government described the current macroeconomic situation as a rare “goldilocks period” of high growth and low inflation.
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