India Set to Overtake Japan as Fourth Largest Economy
Why in the news
Fresh estimates show India’s economy edging towards Japan’s size, so it is likely to become the world’s fourth largest in 2025.
Key facts
- FY25 growth is pegged at 6.5%, a notch above the previous 6.4% estimate.
- Size of the economy: ₹331 trillion or $4.2 trillion in FY25; Japan stood at $4 trillion (2024).
Growth snapshot (%)
| Economy | 2022 | 2023 | 2024 |
|---|---|---|---|
| India | 7.6 | 9.2 | 6.5 (estimate) |
| Japan | 1.1 | 1.5 | 0.1 |
India’s dollar GDP rose from $2.65 trillion (2017-18) to $3.91 trillion (2024-25), dipping to $2.67 trillion in the 2020-21 pandemic year.
Concerns
- Middle income trap: despite fast growth, India remains in the lower middle income group.
- A yearly rupee fall of about 2.25% against the dollar could dent real GDP gains.
- Lasting growth needs policy backing, infrastructure spending and firm domestic demand.
Exam angle
- Expected rank in 2025: fourth largest economy, after the US, China and Germany.
- FY25 growth estimate: 6.5%.
- FY24 growth was revised up by one percentage point.