Beyond the buzz: Has India really surpassed Japan to become the fourth-largest economy?
The Niti Aayog CEO has claimed, citing IMF data, that India is now the world's fourth-largest economy. The reality is a little different.
A wave of excitement spread across social media following reports that India had “officially" surpassed Japan to become the world’s fourth-largest economy. These reports were based on a recent statement by Niti Aayog CEO BVR Subrahmanyam, who cited data from the International Monetary Fund (IMF). However, the same IMF data suggests these celebrations may be somewhat premature.
According to the IMF’s April 2025 World Economic Outlook, India’s GDP is projected to have touched $3.909 trillion during FY25, while Japan’s GDP for calendar year 2024 is estimated at $4.026 trillion. By these numbers, India remains the world's fifth-largest economy—for now.
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The IMF projections show India is expected to overtake Japan only in the FY26, when its GDP is forecast to hit $4.187 trillion, just ahead of Japan’s projected $4.186 trillion for calendar year 2025. By 2030, India is projected to be at $6.77 trillion (2030-31), while Japan will grow to just $5 trillion.
It’s important to note that the IMF represents India’s GDP data on a fiscal-year basis (April-March) and follows the calendar year for other countries such as Japan. However, both are labelled as ‘calendar year’.
That means India’s financial year 2024-25 is labelled as 2024 in IMF documentation, whereas in India, the government data refers to the same period as FY25. This means the first time India's GDP will exceed Japan's will be '2025' by IMF’s labelling. This could have led to a misreading that India had already overtaken Japan, something that won’t actually happen before the end of 2025-26.
GDP per capita is what really matters
Beyond these headline figures, a critical factor that's often overlooked in such comparisons is GDP per capita. While aggregate GDP measures the size of an economy, GDP per capita provides a more accurate measure of average income, living standards, and the distribution of prosperity among citizens.
Despite India’s impressive GDP growth, the country’s vast population means its average economic output per person remains significantly lower than that of Japan.
According to IMF estimates, India’s GDP per capita in FY25 is projected to be $11,228 on a purchasing power parity (PPP) basis, while Japan’s stands at $52,712. Even China, with a similarly large population, has a significantly higher GDP per capita of $27,093.
The large difference in GDP per capita highlights the huge task India faces in ensuring prosperity for all its citizens.
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How GDP rankings have changed over the decades
Global GDP rankings have seen notable shifts over the past two decades. While the United States has consistently retained its position as the world’s largest economy, other countries have seen their rankings change.
In the early 2000s Japan was the second-largest economy, a position it maintained for several decades. However, China surpassed it in 2010 to become the world’s second-largest economy, and has held that position ever since. Japan’s ranking fell further in 2023, when Germany overtook it to become the third-largest economy.
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India, in contrast, held the 13th position in the early 2000s. It had the smallest nominal GDP among its peers at the time. Real GDP accounts for inflation, while nominal GDP does not. Over the years, India steadily climbed the ranks, surpassing countries such as Italy, Brazil and Canada to become the seventh-largest economy by 2015. By 2022 it had overtaken both the United Kingdom and France to become the world’s fifth-largest economy.
India will release official GDP figures for the March quarter and for the whole of FY25 on 30 May. These should provide a clearer picture of where India’s economy actually stands.
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