India has achieved a historic economic milestone by surpassing Japan to become the world’s fourth largest economy in 2025. According to the International Monetary Fund (IMF) and NITI Aayog, India’s GDP now stands at $4.19 trillion, behind only the United States, China, and Germany. This achievement is not just about numbers—it’s a powerful reflection of a nation’s collective resilience, reforms, and rising global stature.
Research shows that India’s economy has doubled in the last 10 years making us one of the most viable economies in the world today. What’s more fascinating is that predictions reveal that at the current growth rate, India’s economy will berth at the top two spots and may even surpass Germany in terms of economic growth. The 105% growth rate in the past decade is a whopping boost from a meagre $2.1 trillion in 2015.
Fast forward to 2025, and it has more than doubled—thanks to sweeping reforms, digital innovation, strong governance, and the entrepreneurial spirit of its people.
Sectors like information technology, renewable energy, manufacturing, agritech, and startups have played a pivotal role in fueling this economic momentum. Government initiatives such as Make in India, Startup India, and Digital India have created the foundation for sustained growth, job creation, and foreign investment.
The recently announced Viksit Bharat Sankalp aims to present a holistic vision for the economic growth of the country by the end of 2047. The major reforms adopted by the country can be broad;y divided into three main categories:
Macroeconomic reforms: In 2014, the Government of India announced certain policies that would help India recover from the shock of the Global Financial Crisis in 2008. Make in India was one such reform that changed the economic trajectory of the country.
Banking reforms: The Government took important measures to clean up the banking systems in the country. Mission Indradanush was one such Government initiative aimed at bringing transparency in banking functions and operations.
Ease of doing business: Again, Government reforms from 2015 aimed at easing red tapeism regarding starting and continuing a business in India.The PM Mudra Yojana generated loans up to 10lakhs for micro enterprises in the country. The scheme helped businesses get credit and funds easily and also generated 1.12 crore additional employment.
Mahindra Group Chairman Anand Mahindra hailed India’s rise as “no small achievement.” For him, watching India leapfrog Japan is not just a statistical milestone but a proud realization of what once seemed like a far-fetched dream during his business school days.
Still, Mahindra was clear: this is not the finish line. India must now focus on per capita income growth, and ensure that economic success translates into better lives for all citizens.
Per Capita Income is the average income of an individual within a specific geographic location. Compared to other countries India ranks low in average per capita income. In 2025 the per capita income in India was recorded at less than $3000 which is far below the average world statistics. Income inequality and large population are some of the factors affecting the per capita income in the country. The Government needs to take significant measures to improve the per capita income in India.
India being a predominantly agricultural economy, measures must be taken to improve the income of farmers. Further, investment in infrastructure and urbanization of the rural population can significantly improve India’s per capita income.
According to the IMF April 2025 Outlook, the top five global economies are:
India’s rise comes on the back of consistent annual growth, effective reforms, and stable macroeconomic policies.
According to NITI Aayog CEO BVR Subrahmanyam, India is expected to become the third-largest economy in the world within the next 2.5 to 3 years—overtaking Germany. This upward trajectory reflects a robust mix of policy-driven reforms, growing domestic demand, and global investor confidence.
However, the challenge now lies in inclusive growth—ensuring that economic success filters down to everyday citizens.
To sustain this growth and further accelerate it, India must double down on the following key areas:
Upskilling India’s massive youth population is critical. Boosting vocational training, digital literacy, and higher education will equip the workforce for future jobs in AI, robotics, clean energy, and advanced manufacturing.
A healthy population is a productive one. Expanding affordable healthcare across rural and urban India will reduce the burden on families and enhance workforce participation.
Better roads, ports, railways, and digital infrastructure will continue attracting foreign investment and lowering logistic costs—key to boosting exports and local manufacturing.
Simplifying regulations, supporting MSMEs, and reducing bureaucratic delays will empower entrepreneurs and encourage innovation.
Investing in modern farming techniques, cold chains, and agri-tech can make India’s agriculture sector more productive, sustainable, and profitable for farmers.
India’s commitment to clean energy through solar, wind, and hydrogen is not just about the environment—it’s a huge economic opportunity that creates jobs and energy independence.
India’s economic leap enhances its influence in international forums like the G20, WTO, and World Bank. It increases global investor trust and allows the country to help shape global economic policy.
With a young population, a rising middle class, and a growing digital economy, India is now seen as a key driver of global demand and innovation.
India’s rise to the 4th largest economy is a celebration—but not the final chapter. As Anand Mahindra put it, “It’s time to stay dissatisfied.” The next challenge is improving quality of life, per capita income, and ensuring that no one is left behind.
With reforms continuing, infrastructure expanding, and its people striving for more, India’s economic story is just beginning. The goal is not just to grow—but to grow better, together, and sustainably.
