Business

IIE DIGITAL DESK : The remarkable milestone for the Indian economy, India has officially overtaken Japan to become the world’s fourth-largest economy, according to NITI Aayog CEO BVR Subrahmanyam. The announcement, made during a recent public address, marks a significant shift in the global economic order and reaffirms India’s rapid economic ascent on the world stage.

Speaking at a Confederation of Indian Industry (CII) event in New Delhi, Subrahmanyam confirmed that India had already crossed the crucial threshold, citing data compiled from multiple global sources. "We have gone past Japan. We are now the fourth-largest economy in the world. It is not something that will happen — it has already happened," the NITI Aayog chief stated. The revelation aligns with estimates from international institutions, including the International Monetary Fund (IMF), which projected earlier this year that India’s nominal GDP would exceed that of Japan during 2024.

India’s economic rise comes at a time of broad-based growth across sectors, supported by robust domestic consumption, strategic government investments, and expanding exports. The country’s gross domestic product (GDP) has steadily climbed in recent years, even amid global challenges such as the COVID-19 pandemic, supply chain disruptions, and geopolitical tensions. In contrast, Japan’s economy has shown signs of stagnation, exacerbated by demographic issues and slower consumer demand.

According to IMF data, India’s economy is now valued at approximately $3.7 trillion, slightly ahead of Japan’s $3.6 trillion GDP. This development positions India just behind the United States, China, and Germany — the world’s top three economies — and further cements the country’s growing influence in global affairs.

Subrahmanyam emphasized that India’s next target should be to surpass Germany and become the third-largest economy within the next few years. “We will overtake Germany to become the third-largest economy by 2027. That’s not far. It’s a matter of four years,” he asserted confidently. He also highlighted the potential for India to become a $5 trillion economy well before 2027 if current growth trends continue and necessary reforms are implemented swiftly.

This achievement is being seen not just as a numerical milestone, but also as a symbol of India’s broader economic transformation. Over the past decade, the Indian government has focused on structural reforms aimed at improving ease of doing business, expanding infrastructure, boosting manufacturing through initiatives like 'Make in India,' and investing in digital public infrastructure. These efforts have helped enhance productivity, attract foreign investment, and increase India’s global competitiveness.

Moreover, India’s demographic advantage — with a young and growing workforce — continues to provide the country with a unique edge over aging economies like Japan. Analysts believe that if India manages to harness this potential through skill development, job creation, and innovation, it could sustain high growth rates well into the next decade.

Economists have also noted the resilience of India’s financial and banking sector, as well as strong performances in areas like technology, pharmaceuticals, and renewable energy. Combined with prudent fiscal management and rising consumer demand, these factors have made India one of the fastest-growing major economies in the world.

While celebrating this milestone, experts have cautioned that challenges still lie ahead — including income inequality, unemployment, and the need for sustained reforms in areas such as education, healthcare, and agriculture. However, with a clear growth trajectory and an increasingly prominent role in international forums like the G20, India’s economic rise seems both significant and sustainable.

The development has triggered a wave of optimism across industry and government circles. As India takes its place among the world’s top economic powers, it sends a clear message to global investors and partners: the Indian growth story is not just intact, but accelerating.