India Poised to Surpass Japan as Fourth Largest Economy by 2025: A Detailed Outlook

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Byline: PTI Analysis | Updated: May 26, 2025

New Delhi — India is on the brink of a significant economic milestone, as it is projected to become the world’s fourth largest economy by the end of 2025. This projection, shared by NITI Aayog member and veteran economist Dr. Arvind Virmani on Monday, follows a recent statement by NITI Aayog CEO BVR Subrahmanyam, who claimed that India has already surpassed Japan to clinch the fourth spot in global rankings.

This assertion aligns with the International Monetary Fund's (IMF) April 2025 World Economic Outlook (WEO), which estimates India’s nominal Gross Domestic Product (GDP) at USD 4.19 trillion by the end of 2025—slightly ahead of Japan’s estimated USD 4.186 trillion.

### When and Where: Timing the Milestone

Virmani clarified that although India is “in the process” of becoming the fourth-largest economy, confirmation will only be possible once full-year GDP data for 2025 becomes available, likely by early 2026. “We need data from all 12 months to definitively state our position,” he noted in an interview with PTI, underscoring that until then, such claims remain projections rather than conclusions.

### Who Said What: Diverging Narratives

While Subrahmanyam previously declared, “We are a USD 4 trillion economy as I speak,” citing IMF data to back the claim, Virmani took a more cautious stance. “Perhaps there was some word which was missed,” he speculated, highlighting the nuanced difference between real-time projections and finalized annual metrics.

Subrahmanyam had also emphasized India’s rapid rise through global economic rankings, stating, “Only the US, China, and Germany are ahead of us. If we stick to our plans, we will be the third largest economy in 2.5 to 3 years.”

### How: Measuring in Dollars and GDP

Virmani stressed that when comparing economies internationally, analysts typically use current US dollar prices and focus on annual GDP metrics. He pointed out that the IMF’s projection for 2025 confirms India’s edge over Japan but warned that the final assessment will depend on the release of complete annual data.

The IMF figures show India's nominal GDP climbing to USD 4.187 trillion in 2025, surpassing Japan’s projected USD 4.186 trillion. Per capita income in India has also seen substantial growth—doubling from USD 1,438 in 2013-14 to USD 2,880 in 2025, according to IMF data.

Why It Matters: The Strategic Significance

India's ascendancy to the fourth position marks a symbolic and strategic achievement in its long-term economic journey. It reflects the resilience and transformation of the Indian economy over the last decade, aided by reforms, digitization, and robust consumption patterns—especially in rural regions.

### Challenges Ahead: Growth Amid Global Uncertainty

Despite this promising outlook, India’s projected growth rate for FY26 has been revised downward by the IMF from 6.5% to 6.2%, owing to escalating global trade tensions and macroeconomic uncertainties. Still, the country’s growth remains substantially higher than the global average, which is projected at 2.8% for 2025 and 3% for 2026.

The IMF notes that India’s economic momentum is expected to remain stable, driven primarily by domestic consumption. “For India, the growth outlook is relatively more stable at 6.2 per cent in 2025, supported by private consumption, particularly in rural areas,” the report states.

### Conclusion: The Road to Economic Leadership

India’s potential elevation to the world’s fourth largest economy is not merely a matter of numbers—it is a testament to sustained policy efforts, demographic dynamism, and resilience amid global volatility. While the final confirmation awaits year-end data, all indicators suggest that India’s economic ascent is both real and imminent.

If the current trajectory continues, India could surpass Germany and become the world’s third-largest economy within the next three years—a development that would dramatically reshape the global economic landscape.

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