In a significant milestone for the nation, India has officially overtaken Japan to become the world's fourth-largest economy. The announcement, made by the central government in a press release dated 29 December 2025, places India's economic size at a formidable $4.18 trillion.
This achievement marks a pivotal moment in India's economic trajectory, setting the stage for an even more ambitious target: to surpass Germany and claim the position of the third-largest global economy by the year 2030.
What's Driving India's Economic Ascent?
The government's release highlighted several key factors underpinning this robust growth. India's growth momentum has been strong, with the Gross Domestic Product (GDP) expanding to a six-quarter high in the July-September quarter of the 2025-26 financial year.
This performance demonstrates remarkable resilience in the face of persistent global trade uncertainties. The primary engine of this expansion has been domestic demand, with robust private consumption playing a central role.
Furthermore, several high-frequency indicators point to a healthy economic foundation. The government noted that inflation has remained below the lower tolerance band, unemployment is on a declining trend, and export performance is showing consistent improvement.
"Financial conditions have stayed benign, with strong credit flows to the commercial sector, while demand conditions remain firm, supported by a further strengthening of urban consumption," the release stated.
Impressive GDP Growth Numbers and Global Forecasts
The hard data confirms the optimistic narrative. India's real GDP growth accelerated to 8.2% in the second quarter (Q2) of 2025-26. This is an increase from 7.8% in Q1 and 7.4% in the final quarter of the previous fiscal year.
This growth surge has captured the attention of major international agencies, which have revised their projections upward, reflecting widespread optimism about India's economic future.
- The World Bank projects a 6.5% growth for India in 2026.
- Moody's expects India to remain the fastest-growing G20 economy, forecasting growth of 6.4% in 2026 and 6.5% in 2027.
- The International Monetary Fund (IMF) has raised its estimates to 6.6% for 2025 and 6.2% for 2026.
- The Organisation for Economic Co-operation and Development (OECD) forecasts growth of 6.7% in 2025 and 6.2% in 2026.
Other notable projections include S&P Global anticipating 6.5% growth this fiscal year and 6.7% next, the Asian Development Bank lifting its 2025 forecast to 7.2%, and Fitch raising its FY26 projection to a strong 7.4% on the back of stronger consumer demand.
The Road Ahead: Aiming for the Top Three
The government's statement outlined a clear and ambitious vision for the coming years. With the current GDP of $4.18 trillion having secured the fourth position, the focus now shifts to the next target.
"India is poised to displace Germany from the third rank in the next 2.5 to 3 years with a projected GDP of $7.3 trillion by 2030," the release confidently declared.
This projection underscores the expectation that India will continue to be the fastest-growing major economy in the world. The United States and China currently hold the top two positions in the global economic rankings based on GDP.
This historic leap to the fourth spot is more than just a statistical achievement; it is a testament to the structural reforms, demographic dividend, and entrepreneurial spirit that are collectively fueling the Indian growth story on the world stage.
