Background on India and Japan’s Economic Standing
In a recent end-of-year economic review, the Indian government asserted that its country has surpassed Japan as the fourth-largest global economy, despite having a significantly lower per capita income.
International Forecasts and Projections
The International Monetary Fund (IMF) estimates that India’s GDP will reach $4.51 trillion by 2026, surpassing Japan’s projected $4.46 trillion GDP for the same period.
India aims to overtake Germany within three years and become the world’s third-largest economy, following the United States and China.
Government’s Optimistic Outlook
The Indian government’s economic review confidently states, “India is among the major economies with rapid growth and is well-positioned to sustain this momentum.”
With a GDP valued at $4.18 trillion, India has surpassed Japan as the fourth-largest economy and is on track to displace Germany from third place within three years, with a projected GDP of $7.3 trillion by 2030.
IMF Projections for 2026
According to the IMF’s projections for 2026, India’s GDP is estimated at $4.51 trillion, exceeding Japan’s projected $4.46 trillion GDP.
Despite concerns over the economic impact of high tariffs imposed by the United States on India’s Russian oil purchases, New Delhi remains optimistic.
The Indian government emphasizes that this growth reflects “resilience amidst persistent uncertainties in global trade.”
Contrasting Perspectives and Challenges
However, alternative measurements paint a less encouraging picture.
India, which surpassed China as the most populous nation in 2023, reported a GDP per capita of $2,694 in 2024, according to the World Bank’s latest figures.
This figure is twelve times lower than Japan’s ($32,487) and twenty times less than Germany’s ($56,103).
Moreover, over a quarter of India’s 1.4 billion population falls between the ages of 10 and 26, yet the country struggles to create well-paying jobs for millions of young graduates.
India’s Economic Milestones
In 2022, India became the world’s fifth-largest economy when its GDP surpassed that of its former colonizer, the United Kingdom, according to FMI data.
Key Questions and Answers
- What does it mean for India to surpass Japan as the fourth-largest global economy?
India’s growing economy has officially surpassed Japan in terms of GDP size, positioning itself as the fourth-largest economy globally. This development is expected to continue, with India aiming to become the world’s third-largest economy by 2026, following the United States and China.
- How do international organizations view India’s economic progress?
The International Monetary Fund (IMF) projects that India’s GDP will reach $4.51 trillion by 2026, surpassing Japan’s estimated $4.46 trillion GDP for the same period. Despite concerns over US tariffs on Indian oil purchases, the IMF and India’s government remain optimistic about India’s economic growth.
- What challenges does India face despite its economic progress?
India’s GDP per capita is significantly lower than Japan and Germany, reflecting the vast population disparity. Additionally, India grapples with generating well-paying jobs for its large youth population, which poses a considerable challenge to sustained economic growth.
