India has reached a historic economic milestone, officially becoming the world’s fourth-largest economy, outranking Japan. This significant development was confirmed by B.V.R. Subrahmanyam, CEO of NITI Aayog, following the tenth meeting of the NITI Aayog Governing Council. “The global and economic environment is conducive for India, and as I speak, we are the world’s fourth-largest economy. Today, we have become a $4 trillion economy,” Subrahmanyam stated.
Surpassing Expectations Amidst Global Challenges
Citing data from the International Monetary Fund (IMF), Subrahmanyam highlighted that India’s economy has now eclipsed that of Japan. This remarkable feat positions India behind only three nations: the United States, China, and Germany. Subrahmanyam expressed optimism that India is on track to surpass Germany and claim the third-largest economy spot within the next two-and-a-half to three years, provided the current growth trajectory continues.
This achievement is particularly noteworthy given the prevailing global economic uncertainties. Even the imposition of tariffs by the United States and geopolitical tensions, such as those with Pakistan, have failed to impede India’s robust economic expansion. India has consistently been one of the world’s fastest-growing economies, and its recent climb past Japan further solidifies its position on the global economic stage.
Navigating Trade Dynamics and Future Prospects
Addressing queries regarding President Donald Trump’s past statements on trade, Subrahmanyam remarked on the expectation that Apple iPhones sold in America would be manufactured domestically, rather than in India or elsewhere. He acknowledged the unpredictability of future tariffs but emphasized that India’s dynamism makes it an increasingly attractive and cost-effective location for manufacturing. Furthermore, Subrahmanyam revealed that the second round of the asset monetization pipeline is under preparation and is expected to be announced in August, signaling continued efforts to boost economic activity.
Strong Fundamentals Driving Growth
Leading international financial institutions, including the World Bank and the IMF, have consistently acknowledged the strength of the Indian economy. Their recent reports forecast that India’s GDP growth rate will remain robust in the foreseeable future. CareEdge Ratings, for instance, recently projected India’s GDP growth at 6.8% for the fourth quarter, contributing to an overall growth rate of 6.3% for the fiscal year 2025. This growth is attributed to strong performances across various sectors, including agriculture, hospitality, transportation, and manufacturing.
Japan’s Economic Headwinds
In stark contrast to India’s upward trajectory, Japan’s economy has been grappling with significant challenges, including the impact of tariffs and persistent inflation. Reports indicate that inflation in Japan surged to 3.5% in April, exceeding market forecasts and adding to the economic pressures faced by the nation. This divergence in economic fortunes underscores India’s resilient growth amidst a complex global landscape.