The Indian government recently announced that the size of its economy for the 2025-2026 financial year, concluding in March 2026, is estimated to reach 345,470 billion rupees at current prices.

Bloomberg's calculations, based on the average exchange rate for this period, suggest the South Asian economy will be worth approximately 4 trillion USD. This figure is lower than Japan's projected GDP of 4.4 trillion USD for 2025.

Consequently, India has not yet overtaken Japan to become the world's fourth largest economy. Sakshi Gupta, an economist at HDFC Bank, commented, "With the new nominal GDP data being lower than expected and previous estimates, it is unlikely that India's economic scale will surpass Japan this year, or even next year."

Customers purchasing vegetables at an open-air market in Ahmedabad, India. *Photo: Reuters*

Previously, an economic report from the Indian government on 29/12/2025 estimated that the country had already surpassed Japan to become the world's 4th largest economy. They anticipated replacing Germany in the 3rd position within 2,5 years, with the economy reaching 7.3 trillion USD by 2030.

Prime Minister Narendra Modi and other senior officials had also referred to India as the world's fourth largest economy. The International Monetary Fund (IMF) had earlier predicted that India would achieve this milestone in the current financial year.

However, progress has been slower due to the rupee depreciating by nearly 5% against the USD last year, reducing the USD value of GDP, while the yen strengthened. India's Chief Economic Advisor, V. Anantha Nageswaran, confirmed that exchange rates were an unfavorable factor when calculating the country's economic scale in USD this year.

Nevertheless, he affirmed that becoming an economy larger than Japan and Germany is certain. He stated, "We are on track to become one of the three or four largest economies in the world. There is no doubt that this will happen in the next few years." According to Nageswaran, India's growth rate is leading the G20.

Experts agree that India's economy is growing robustly, with a population of 1.4 billion – the world's largest and still increasing, mostly comprising young people. The National Statistics Office projects GDP growth of 7.6% for the 2025-2026 financial year and 7-7.4% for the 2026-2027 financial year. In contrast, Japan's economy is expected to grow by only 1% this year, with a declining population.

India became the world's fifth largest economy in 2022 when its GDP surpassed that of the UK, according to IMF data. The prospect of surpassing Japan to become the world's 4th largest economy will reflect scale rather than prosperity for India.

More than 25% of the country's population is currently in the 10-26 age group, according to government data. The nation still struggles to create high-paying jobs for millions of young people. India's per capita income is above 3,000 USD, compared to 36,390 USD in Japan, as projected by the IMF for 2026.

Phi An (according to Reuters, TOI, Bloomberg)