India has moved ahead of Japan to become the world’s fourth-largest economy, according to a recent economic review cited by New Delhi. The report highlights that India’s economic growth has been stronger than expected and suggests that the country could soon rise even higher in global rankings.

Based on current trends, the review said India is likely to overtake Germany within the next three years to become the world’s third-largest economy. If this happens, India would trail only the United States and China in terms of overall economic size.

The review stated that India’s gross domestic product (GDP) has already reached around $4.18 trillion (€3.55 trillion). It further projected that the country’s GDP could rise to $7.3 trillion by 2030 if present growth momentum continues.

On current trends, the review noted that India would be behind only the US and China in terms of economic strength.

India’s real GDP growth has shown strong performance in recent quarters. The economy expanded by 8.2% in the second quarter of the 2025–26 financial year, compared to 7.8% in the previous quarter. This marked a six-quarter high, reflecting sustained economic momentum.

The review also pointed to improved export performance. Merchandise exports rose to $38.13 billion in November, compared to $36.43 billion in January. This growth was supported by key sectors such as engineering goods, electronics, pharmaceuticals, and petroleum products.

However, the report clarified that official confirmation of India overtaking Japan will depend on final annual GDP data, which is due to be released in 2026. The International Monetary Fund (IMF) has indicated that India is expected to surpass Japan next year.

Meanwhile, the Reserve Bank of India (RBI) has revised its growth forecast for the 2025–26 financial year upward to 7.3%, reflecting confidence in the economy’s resilience.

According to the review, India’s recent growth has been driven mainly by strong domestic demand. Private consumption has remained particularly robust, even as the global economy faces trade disruptions and policy uncertainty.

The government described the current economic phase as a rare “Goldilocks” period—a time of high growth and low inflation. It stated that strong corporate balance sheets, steady credit availability, and ongoing economic reforms have created favourable conditions for long-term expansion.

An official statement quoted in the review said, “India is among the world’s fastest-growing major economies and is well-positioned to sustain this momentum.”

Another official note added, “With the ambition of attaining high middle-income status by 2047, the centenary year of its independence, the country is building on strong foundations of economic growth, structural reforms, and social progress.”

Despite the positive outlook, the review acknowledged that India still faces several economic challenges. One major issue is income disparity when compared with advanced economies.

According to the latest World Bank data, India’s GDP per capita stood at $2,694 in 2024. This is significantly lower than Japan’s $32,487 and Germany’s $56,103, highlighting the wide gap in average income levels.

India also became the world’s most populous country in 2023, surpassing neighbouring China. Government data shows that more than a quarter of India’s 1.4 billion population is between the 10- 26 age group.

Creating enough well-paid jobs for millions of young people entering the workforce is a key challenge going forward. However, the review struck an optimistic tone on this issue as well.

It said, “As one of the world’s youngest nations, India’s growth story is being shaped by its ability to generate quality employment that productively absorbs its expanding workforce and delivers inclusive, sustainable growth.”

The review also referred to recent policy actions taken by the government. Prime Minister Narendra Modi unveiled broad consumption tax cuts earlier this year and pushed through labour law reforms after economic growth slowed to a four-year low in the 12 months ending March 31.

At the same time, currency pressures have increased. The Indian rupee hit a record low against the US dollar in early December, after declining by about 5% in 2025. This fall came amid concerns over the absence of a trade deal with Washington and the impact of higher tariffs on Indian exports.

India’s steady climb up the global economic ladder has been visible in recent years. In 2022, India became the world’s fifth-largest economy, overtaking its former colonial ruler, Britain, according to IMF figures.

Now, with India reportedly moving past Japan, the review suggests that the country’s economic transformation is continuing at a rapid pace. While challenges related to income levels, jobs, and currency stability remain, officials believe that strong growth fundamentals and reforms are placing India on a path toward sustained expansion in the coming decades.