India overtakes Japan to become world’s fourth-largest economy, says NITI Aayog Chief

May 26, 2025 by News Desk

India has surpassed Japan to become the world’s fourth-largest economy in terms of nominal GDP, according to BVR Subrahmanyam, the CEO of NITI Aayog.

Speaking at a public event on May 24, Subrahmanyam said, “We are the fourth largest economy as I speak. We are a USD 4 trillion economy. This is not my data. This is IMF data. India today is larger than Japan.”

His announcement follows the International Monetary Fund’s (IMF) April 2025 World Economic Outlook report, which projects India’s GDP to reach USD 4.19 trillion this year, slightly ahead of Japan. However, the IMF has not officially confirmed that the transition has already occurred, noting only that India is expected to overtake Japan sometime during 2025.

Until 2024, India held the fifth spot in global rankings. With the current economic momentum, only the United States, China, and Germany remain ahead. Subrahmanyam noted that India could become the third-largest economy within the next 2.5 to 3 years if it continues on its current path.

Industrialist Anand Mahindra called the development a “dream come true,” recalling how the notion of surpassing Japan once seemed unimaginable. He emphasized, however, that India’s next focus should be on improving per capita income, saying, “India’s next leap must be in per capita GDP, not just overtaking Germany.”

While India’s GDP has surged, its per capita income remains significantly lower than that of developed economies. India’s per capita income is expected to reach around USD 2,880 in 2025, more than double the figure from a decade ago. In comparison, Japan’s per capita income stands at approximately USD 33,950 — nearly twelve times higher than India’s.

According to the IMF, India’s economy is expected to grow at 6.2% in FY26, slightly lower than its earlier estimate of 6.5%, due to global trade tensions and geopolitical uncertainty. Nevertheless, domestic consumption, particularly in rural areas, continues to fuel strong growth.

India’s rise from being among the ‘fragile five’ economies a decade ago to now joining the top four has been outlined in NITI Aayog’s “Viksit Rajya for Viksit Bharat @ 2047” paper. It envisions India as a USD 30 trillion economy by 2047, built on six strategic pillars, including innovation, citizen empowerment, and strong governance.

Though global institutions have yet to make the ranking official, India’s growing confidence on the economic front is already shaping new narratives at home and abroad.