From $2 Trillion To $4 Trillion: India’s Journey To The Top 4 Economies

India has officially overtaken Japan to become the world’s fourth-largest economy, according to BVR Subrahmanyam, CEO of NITI Aayog, citing data from the International Monetary Fund (IMF). The announcement came during the 10th NITI Aayog Governing Council Meeting, themed ‘Viksit Rajya for Viksit Bharat 2047’.

“We are the fourth largest economy as I speak. We are a $4 trillion economy as I speak, and this is not my data. This is IMF data. India today is larger than Japan. It's only the United States, China, and Germany which are larger,” Subrahmanyam said.

This development marks a significant milestone in India’s economic history, which has seen steady acceleration over the past few decades. The country’s economic transformation—rooted in liberalisation, digitalisation, and domestic consumption—has made it a rising force in global markets.

From License Raj to Liberalisation: The Economic Evolution
India’s rise has been long in the making. In 1991, faced with a severe balance of payments crisis, the Indian government launched a series of liberalisation reforms, opening up the economy to foreign investments, deregulating markets, and cutting down on red tape. This shift away from the restrictive “License Raj” laid the foundation for long-term growth.
Over the next three decades, India steadily transitioned from an agriculture-based economy to a services and industry-driven one. IT, telecom, manufacturing, and financial services flourished, and India became a global hub for software exports.

GDP Growth: A Consistent Upward Trajectory
According to IMF and World Bank data, India’s nominal GDP has nearly doubled in the last decade, from $2.1 trillion in 2015 to $4 trillion in 2024. In purchasing power parity (PPP) terms, India has been the third-largest economy globally, behind only China and the U.S., for several years.

 

What Drove India’s Rise?

1. Digital Infrastructure:
Initiatives like Digital India, UPI-based payment systems, and the Aadhaar identity project have streamlined economic activity and financial inclusion across sectors.

2. Robust Consumption:
With a young and aspirational population, India’s consumption-driven economy has remained resilient, even in the face of global slowdowns.

3. Service Sector Boom:
India's IT, BPO, and financial services industries have been major contributors to GDP and exports.

4. Government Reforms:
Policies like the Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), and Production Linked Incentive (PLI) schemes have improved ease of doing business.

IMF's Perspective on India
The IMF has repeatedly acknowledged India’s rapid growth trajectory. In its April 2024 World Economic Outlook, the IMF projected India’s economy to grow at 6.8%, the highest among major economies. The IMF called India a “bright spot in the global economy”, crediting strong domestic demand and structural reforms for the sustained momentum.

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India Surpasses Japan To Become 4th Largest Economy: NITI Aayog CEO

IMF Quota and Voting Share: India’s Growing Global Influence
India’s rising economic profile is also reflected in its role at the IMF. Following the 14th General Review of Quotas in 2016, India’s quota share doubled to SDR 13.11 billion, making up 2.75% of total IMF quotas. Its voting power also rose to 2.63%, placing it among the IMF’s top ten shareholders.
 

What Lies Ahead?
India’s rise to the fourth spot comes as a symbolic and strategic shift in global economics. As per media reports, Experts believe India is on track to become the third-largest economy by 2027, potentially surpassing Germany in nominal GDP, thanks to a robust policy framework and growing global investment interest.

As India looks toward its 2047 vision of becoming a ‘vishikt bharat’ developed nation, its climb up the global economic ladder reflects more than just numbers—it signals a fundamental rebalancing of global power.