Business APAC
May 26, 2025
India has climbed the global economic ladder to become the world’s fourth-largest economy, nudging Japan down to fifth. The significant update came from NITI Aayog CEO B.V.R. Subrahmanyam over the weekend, who pointed to the International Monetary Fund’s (IMF) just-updated 2025 forecasts. His announcement, following the 10th Governing Council Meeting of the influential policy think tank, confirms India’s economic might now sits behind only the United States, China, and Germany.
Speaking with reporters on Saturday, Subrahmanyam didn’t mince words about the opportune global environment for India. “We are the fourth largest economy as I speak. We are a $4 trillion economy as I speak, and this is not my data. This is IMF data. India today is larger than Japan,” he asserted.
Digging into the numbers, the IMF’s World Economic Outlook from April 2025 does indeed project India’s nominal Gross Domestic Product (GDP) for 2025 to just pip Japan’s. The estimates show India’s economy reaching roughly $4.19 trillion (some pinpoint $4.187 trillion for India’s fiscal year 2025-26). Japan, in contrast, is forecast at a nearly identical $4.19 trillion (or $4.186 trillion for its 2025 calendar year). This is a clear step up from 2024, when India was still ranked fifth.
India’s Economic Leap: Now 4th Largest, with Eyes Set on Germany
This jump is more than just a new ranking; it’s a clear signal of India’s dynamic growth when stacked against many other leading nations. The IMF’s own April documentation had already forecast a healthy 6.2% expansion for India in 2025, cementing its reputation as one of the globe’s fastest-moving major economies.
“It is only the US, China, and Germany which are larger than India,” Subrahmanyam further explained, before laying out the next ambition: “and if we stick to what is being planned and what is being thought through, in 2.5-3 years, we will be the third largest economy.” That target is Germany, currently holding the third position with an economy projected to be around $4.74 trillion for 2025.
Most economic watchers believe India’s consistent upward drive comes from a potent cocktail of strong homegrown demand, ongoing deep-seated reforms, and a manufacturing sector getting a real boost from programs like “Make in India” alongside hefty infrastructure investments.
Dr. Arvind Virmani, who previously served as Chief Economic Adviser to India’s government, offered his take: “This is a testament to India’s resilience and the demographic dividend. For India to become the fourth-largest economy is a significant achievement. However, the focus must remain on inclusive growth and further reforms to sustain this momentum.“
India’s Economic Surge Aligns with ‘Viksit Bharat 2047’ Vision
Subrahmanyam also spotlighted the notable rise in India’s per capita income. IMF figures show it has practically doubled, jumping from about $1,438 in 2013-14 to an expected $2,880 in 2025. It’s a welcome trend, though India’s per capita income still has a long way to go to catch up with the top three economic powerhouses.
The push to become the India fourth largest economy wasn’t just a dream; it’s been a core objective of economic policy. This new status as the India fourth largest economy feeds directly into the government’s “Viksit Bharat @ 2047” blueprint – a plan to see India as a developed, $30 trillion economy when it marks 100 years of independence. Hitting this rank is a big tick on that checklist.
Looking down the road, keeping this economic engine revving means India must deftly handle a tricky global environment, with ongoing trade squabbles and shifting geopolitical plates. The IMF itself, while bullish on India, sees global growth moving at a more sedate 2.8% in 2025.
For India to not just hold its new spot as India fourth largest economy but also to challenge for the third, requires relentless focus from policymakers on making business easier, pulling in more foreign investment, and building a more skilled workforce. The government’s current strategy, which tries to keep finances in check while still spending wisely on big projects, is seen by many as the right fuel for this continued climb, truly cementing that India fourth largest economy is here and now.
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