India has officially overtaken Japan to become the world's fourth-largest economy. With a GDP of $4.18 trillion, India's economic growth has been robust, and projections indicate it will likely surpass Germany to claim the third position by 2030.
Several factors contribute to India's impressive economic performance. The country's real GDP expanded by 8.2% in the second quarter of fiscal year 2025-26, marking a six-quarter high. This growth is fueled by strong domestic demand and structural reforms. Private consumption has been a key driver, supported by increasing urban demand and healthy credit flows to the commercial sector. Furthermore, declining unemployment, controlled inflation, and improving export performance have all played a role in bolstering the nation's economic expansion.
International agencies such as the IMF, World Bank, Moody's, and OECD have revised India's growth forecasts upwards, signaling confidence in its continued economic ascent. The Reserve Bank of India (RBI) has also increased its GDP growth forecast for fiscal year 2025-26 to 7.3% from an initial estimate of 6.8%. This reflects broad-based momentum across various sectors, supported by factors such as income tax and Goods and Services Tax (GST) rationalization, stable crude oil prices, and front-loaded government capital expenditure.
India's ambition to achieve high middle-income status by 2047, the centenary of its independence, is underpinned by strong economic foundations, ongoing structural reforms, and social progress. To realize this vision, the country needs to sustain an average annual growth rate of 7.8% over the next two decades. This requires continuous reforms to boost public and private investment, create favorable conditions for job creation, and drive productivity.
Looking ahead, India is projected to reach a GDP of $7.3 trillion by 2030. S&P Global projects an annual growth rate of 6.7% through 2030-31. By 2047-48, Ernst and Young (EY) estimate that India could become a $26 trillion economy with a per capita income exceeding $15,000. Key enablers for this growth include IT and BPO services, a thriving digital economy and a skilled workforce. The technology sector is expected to contribute nearly 20% of India's GDP by 2030, outpacing traditional industries. Other sectors such as healthcare and space are also expected to contribute significantly to India's economic growth.
While India's economic prospects appear bright, challenges remain. Rising population will require significant investments in basic services. Additionally, managing domestic energy demand and balancing it with investments in sustainable technologies will be crucial. Despite these challenges, India is well-positioned to maintain its growth momentum and solidify its position as a major global economic power.
