In a historic milestone for India’s economic journey, the country has overtaken Japan to become the world’s fourth-largest economy, according to the April 2025 edition of the IMF’s World Economic Outlook (WEO).
Announcing the development, NITI Aayog CEO BVR Subrahmanyam stated after the 10th Governing Council meeting, “We are now a $4 trillion economy. As of now, we are the fourth largest economy.”
India’s GDP Now at $4.187 Trillion
According to the latest IMF data, India’s GDP stands at $4.187 trillion, narrowly overtaking Japan’s $4.186 trillion. This marks a major shift in the global economic hierarchy and underscores India’s rising stature in global markets.
Top 5 Economies in the World (2025 IMF Rankings):
- United States
- China
- Germany
- India
- Japan
Despite this massive leap, India ranks 144th in GDP per capita, reflecting significant income inequality and a lower average standard of living compared to many smaller nations.
Growth Projections and Global Headwinds
The IMF projects India’s economy to grow at 6.2% in 2025 and 6.3% in 2026, maintaining strong momentum ahead of other major economies. However, these projections were revised slightly downward from the January update due to increasing global trade tensions and economic uncertainty.
By comparison, China’s economic slowdown is expected to be sharper in the long term, with a 2.7 percentage point decline in growth from its 2016–18 average. The slowdown is attributed to adverse demographics and the fading phase of rapid productivity catch-up.
India, meanwhile, is expected to witness a more modest decline—0.7 percentage point between 2025 and 2050—thanks to its favorable demographics, though the IMF warns that this advantage may fade post-2050.
Long-Term Challenges Loom
While India’s economic ascent is being celebrated, the IMF cautions that the demographic dividend—which currently boosts growth—will eventually turn into a headwind. As India passes its demographic turning point in the second half of this century, growth could slow sharply unless productivity, infrastructure, and social development keep pace.
“India’s achievement is remarkable, but sustaining it will require bold reforms, investments in human capital, and bridging inequality,” said an economist close to the WEO discussions.
As India cements its place among the world’s top four economies, the dual narrative of high aggregate wealth vs low per capita prosperity reminds policymakers that inclusive growth must be at the heart of the nation’s economic strategy moving forward.
