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By Aliss Higham
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India has become the fourth largest economy in the world, according to the Indian government's end-of-year economic review, potentially passing Japan and California.
"India is among the world’s fastest-growing major economies" and is set to sustain this momentum, New Delhi said on Monday.
"With GDP valued at US$4.18 trillion, India has surpassed Japan to become the world’s fourth-largest economy, and is poised to displace Germany from the third rank in the next two-and-a-half to three years, with projected GDP of US$7.3 trillion by 2030."
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Japan and California are yet to release GDP estimates for the year. Official confirmation of figures will rely on the IMF's final annual GDP figures expected in the first half of 2026.
India's new figures could represent a significant annual jump. India's GDP was estimated at $3.9 trillion in 2024 by the International Monetary Fund's (IMF) 2024 World Economic Outlook data.
In terms of sovereign nations in 2024, Japan held fourth place ($4.02 trillion), behind Germany ($4.65 trillion), China ($18.74 trillion) and the U.S. ($29.18 trillion), according to the IMF. India placed fifth.
In April this year, IMF's data showed California’s gross domestic product (GDP) reached $4.10 trillion, surpassing Japan’s $4.01 trillion.
Governor Gavin Newsom said at the time: "California isn’t just keeping pace with the world, we’re setting the pace. Our economy is thriving because we invest in people, prioritize sustainability, and believe in the power of innovation."
Newsweek has contacted Newsom via email for comment outside of regular working hours.
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India's Economy in 2025
India’s economy maintained strong momentum in the second quarter of 2025-26, with real GDP growing 8.2 percent, up from 7.8 percent in the previous quarter and 7.4 percent at the end of 2024-25, according to government data. The growth was powered by resilient domestic demand despite global trade and policy uncertainties.
Industrial and services sectors led the expansion, pushing real gross value added (GVA) up 8.1 percent. The job market also improved, with unemployment dropping to 4.7 percent in November—the lowest since April 2025.
Inflation eased sharply, with consumer prices rising just 0.71 percent in November, down from 4.26 percent in January. Exports continued to climb, reaching $38.13 billion in November, compared with $36.43 billion in January.
The Reserve Bank of India has revised its GDP growth forecast for 2025-26 to 7.3 percent, up from 6.8 percent. Analysts attribute the upbeat outlook to strong domestic demand, tax reforms, lower crude oil prices, accelerated government capital spending, and supportive monetary policies, all underpinned by lowered inflation.
"High-frequency indicators point to sustained economic activity: inflation remains below the lower tolerance threshold, unemployment is on a declining trajectory, and export performance continues to improve," the government said. "Furthermore, financial conditions have stayed benign, with strong credit flows to the commercial sector, while demand conditions remain firm, supported by a further strengthening of urban consumption."
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