India Surpasses Japan to Become World’s Fourth-Largest Economy: The Tale of Two Asian Giants

India has overtaken Japan to become the fourth-largest economy in the world, just behind the United States, China, and Germany, NITI Aayog CEO B.V.R. Subrahmanyam announced.

“It's only the United States, China, and Germany that are larger, and if we stick to what is being planned, what is being thought through, it's a matter of another 2, 2.5 to 3 years; we would become the third largest economy,” Subrahmanyam added.

The announcement was made during a press briefing following the 10th NITI Aayog Governing Council meeting on ‘Viksit Rajya for Viksit Bharat 2047’.

The International Monetary Fund (IMF) has also confirmed that India’s economy is now larger than Japan’s.

According to Subrahmanyam, citing IMF data, the Indian economy has now reached a nominal GDP of USD 4 trillion.

The IMF has forecast India’s GDP growth at 6.5% for 2025. In contrast, Japan is projected to grow at just 1.1% in 2025.

India’s Rapid Economic Growth vs Japan’s Relative Stagnation

As of 2024, India’s GDP was approximately USD 3.91 trillion, compared to Japan’s USD 4.196 trillion.

India’s GDP per capita stands at around USD 2,500, while Japan’s is approximately USD 34,000.

India’s nominal GDP is expected to reach USD 4,187.017 billion in the fiscal year 2026, surpassing Japan’s estimated GDP of USD 4,186.431 billion, according to the IMF’s World Economic Outlook.

Why Has Japan’s Economic Growth Stagnated?

Economists attribute Japan’s economic stagnation largely to the significant depreciation of the yen against the dollar. In contrast, the Indian rupee has remained relatively stable.

Japan has also faced prolonged periods of recession and deflation over the decades. These economic challenges, combined with structural issues and a rapidly aging population, have contributed to its sluggish growth.

India, by comparison, has experienced steady economic expansion since the early 2000s.

At current growth rates of 6–7% annually, India is projected to surpass Germany by 2027, becoming the third-largest economy globally.

India’s Growth Drivers Vs Japan's Disadvantages

India’s key growth drivers include: 

1. A young and expanding population

2. Rapid digital transformation

3. Strong push for manufacturing through initiatives like Make in India

4. Massive domestic consumption

5. Robust infrastructure development

6. Rising global trust in Indian markets amid shifting geopolitical dynamics

7. These factors are positioning India to achieve its target of a USD 5 trillion economy.

In contrast, Japan faces serious demographic challenges, with a shrinking and aging population that poses long-term risks to sustained economic growth.

Also Read: India Races Ahead Of Japan In GDP Rankings, Q4 Growth Pegged At 7% – Report