The IMF's April 2025 World Economic Outlook indicates that India's nominal GDP has marginally exceeded Japan's, which stands at $4.186 trillion. This shift reflects India's robust economic growth trajectory, characterized by a 105% increase in GDP over the past decade, rising from $2.1 trillion in 2015.
B V R Subrahmanyam, CEO of NITI Aayog, highlighted this milestone during a press briefing, attributing the achievement to favorable geopolitical and economic conditions that have benefited India. He also noted India's competitive advantage in manufacturing and anticipated that the country could become the third-largest economy within the next 2.5 to 3 years.
India's economic ascent is underpinned by several factors, including strong private consumption, particularly in rural areas, and a youthful, expanding workforce. Structural reforms such as the implementation of the Goods and Services Tax , digitalization initiatives, and infrastructure development have enhanced economic efficiency and attracted foreign investment. The service sector, encompassing IT, finance, and telecommunications, continues to be a significant contributor to GDP.
Despite these advancements, challenges remain. India's general government gross debt stands at 82.6% of GDP, posing fiscal policy concerns. Additionally, the country faces structural issues such as low overall productivity, a struggling manufacturing sector, and a complex business environment. Climate change also presents significant risks, with projections suggesting that annual GDP losses due to extreme temperatures could reach 2.5-4.5% by 2030.