India ‘world’s fourth-largest economy,’ says leading think-tank

India now fourth-largest economy in the world, overtaking Japan, according to the top Indian government public policy think-tank.

BVR Subrahmanyam, chief executive of NITI Aayog, described the overall geopolitical and economic environment as “favourable to India”. He said: “We are the fourth-largest economy as I speak. We are a $4 trillion economy.” Citing IMF data, Subrahmanyam added that India’s economy is now larger than Japan’s.

“It is only the US, China and Germany that are larger than India, and if we stick to what is being planned and what is being thought through, in two-and-a-half to three years we will be the third largest economy,” Subrahmanyam said.

The International Monetary Fund (IMF), in its latest World Economic Outlook (WEO) report said that India is expected to be the fourth largest economy in the world with a GDP of $4.19 trillion in 2025.

India’s nominal GDP for 2025 (FY26) is expected to be $4.187 billion, marginally ahead of the likely GDP of Japan which is estimated at $4.187 billion, the IMF said.

According to IMF data, India’s per capita income has doubled from $1,438 in 2013-14 to $2,880 in 2025.

The organisation also said the Indian economy is projected to grow at 6.2% in 2025-26, slower than earlier estimated rate of 6.5%, due to escalated trade tensions and global economic uncertainty.

“For India, the growth outlook is relatively more stable at 6.2% in 2025, supported by private consumption, particularly in rural areas,” the IMF stated.

According to the report, the global growth is projected at 2.8% in 2025, lower by 0.5 percentage points estimated earlier. In 2026, the global economy is estimated to grow at 3%.

A new NITI Aayog paper, called ‘Viksit Rajya For Viksit Bharat @ 2047’, said from being considered a part of the so-called ‘fragile five’ economies of the world, India rose to become the top five economies of the world in just a decade.

In 2013, Morgan Stanley coined the term ‘fragile five’ in reference to the emerging market economies of Brazil, India, Indonesia, South Africa and Turkey.

The World Bank defines high-income countries as those whose annual per capita income is more than $14,005 (2024–25). India has the potential and aims to be a high-income country by 2047, with an economy worth $30 trillion.

“It will have all the attributes of a developed country with a per capita income that is comparable to the high-income countries of the world today,” the paper said.

It added that in order to achieve the goal of a Viksit Bharat by 2047, an overall framework for strategic interventions and reforms based on six key building blocks have been identified.

These are: Macro-Economic Goals and Strategy; Empowered Citizens; A Thriving and Sustainable Economy; Technology and Innovation Leadership; A Global Leader, Vishwa Bandhu; and Enabling Factors – Governance, Security and Justice delivery.

Interim India-US trade deal could be in place by July

A team of US officials are expected to visit India in June for trade talks, with the possibility that the two countries agreeing on an interim trade pact by June 25, trade sources have said.

India’s chief negotiator, Special Secretary in the Department of Commerce Rajesh Agrawal, recently undertook a four-day visit to Washington, holding talks with his US counterpart on the proposed agreement.

Commerce and Industry Minister Piyush Goyal was also in Washington, meeting with United States Commerce Secretary Howard Lutnick twice during his visit.

Both sides are looking at an interim trade deal before the first tranche of the proposed bilateral trade agreement (BTA), with the US’ 26% reciprocal tariff on India suspended until 9 July this year. However, Indian goods still attract the 10% baseline tariff imposed by the US.

Both countries have fixed a deadline to conclude the first phase of the proposed BTA by September-October of this year.

The US was India’s largest trading partner for the fourth consecutive year in 2024-25, with bilateral trade valued at $131.84 billion. The US accounts for about 18% of India’s total goods exports.