India surpasses Japan to become world’s 4th largest economy, eyes third spot by 2030: Govt

India has surpassed Japan to become the world’s fourth-largest economy, with gross domestic product (GDP) valued at $4.18 trillion, the government has said.

The economy is poised to displace Germany from the third rank in the next 2.5 to 3 years, with GDP projected to rise to $7.3 trillion by 2030, according to a government release providing a snapshot of reforms in 2025.

The US is the world's largest economy, and China occupies the second spot.

India’s real GDP grew 8.2%, up from 7.8% in the previous quarter and 7.4% in the fourth quarter of 2024-25.

"With GDP valued at USD 4.18 trillion, India has surpassed Japan to become the world's fourth-largest economy, and is poised to displace Germany from the third rank in the next 2.5 to 3 years with a projected GDP of USD 7.3 trillion by 2030," the release said.

Domestic demand, led by robust private consumption, played a central role in supporting growth.

Real gross value added (GVA) rose 8.1% in the second quarter, driven by buoyant industrial and services activity.

High-frequency indicators point to sustained economic activity, with inflation remaining below the lower tolerance threshold and unemployment on a declining trajectory.

The World Bank has projected a 6.5% growth in 2026; Moody's expects India to remain the fastest-growing G20 economy with a growth of 6.4% in 2026 and 6.5% in 2027.

The IMF has raised its projections to 6.6% for 2025 and 6.2% for 2026; the OECD forecasts 6.7% growth in 2025 and 6.2% in 2026.

The Reserve Bank of India revised India’s GDP growth forecast for 2025-26 upwards to 7.3% from an earlier estimate of 6.8%.

"India is among the world's fastest-growing major economies and is well-positioned to sustain this momentum. With the ambition of attaining high middle-income status by 2047- the centenary year of its independence, the country is building on strong foundations of economic growth, structural reforms, and social progress," the government said.

The growth outlook is supported by robust domestic demand, tax rationalisation, softer crude oil prices, front-loading of government capital expenditure, and facilitative monetary and financial conditions amid benign inflation, it added.

The release also highlighted that inflation remains below the lower tolerance threshold, unemployment is on a declining trajectory, and export performance continues to improve.

Consumer price inflation softened sharply to 0.71% in November 2025 from 4.26% in January, while the unemployment rate eased to 4.7% in November from 5.2% in October, the lowest since April, the release said.

The current macroeconomic environment presents a rare “Goldilocks period” of high growth and low inflation for the Indian economy, the government said.