India Is the 4th Largest Economy — But Not Even in the Top 100 by Income. How?
Nidhi | May 27, 2025, 08:24 IST
India is set to become the world’s 4th largest economy by the end of 2025, overtaking Japan. Despite this impressive growth in nominal GDP, India’s per capita income remains low, ranking 143rd globally, with a significant portion of its population still living in poverty. This article explores the contrast between India’s economic rise and the persistent challenges faced by its people.
India has set to overtake Japan to become the world’s 4th largest economy. But in terms of average income, it ranks below 125 other countries.
This is the paradox of modern India. While its GDP touches the skies, its people still struggle for basics like health, education, clean water, and jobs
India’s economy is making headlines worldwide. According to the International Monetary Fund’s (IMF) World Economic Outlook report for April 2025, India will become the 4th largest economy in the world by the end of 2025 (FY 2025-26) in nominal GDP terms, overtaking Japan and sitting just behind the United States, China, and Germany.
This is no small achievement. Just over a decade ago, in 2014, India ranked 10th globally. It climbed to 5th place after surpassing the United Kingdom and is now on the cusp of overtaking Japan. India’s nominal GDP has more than doubled in these 11 years, reaching nearly $4 trillion in 2025 — a 105% increase since 2014.
In 2014, India was the 10th largest economy in the world. Fast forward to 2025, and India’s nominal GDP has surged past Japan, reaching $4.1 trillion according to the IMF’s World Economic Outlook (April 2025).
Despite the macroeconomic numbers, the average Indian earns far less than the global norm.
India’s per capita GDP puts it behind Sri Lanka, Bangladesh, Bhutan, and even war-torn nations like Iraq and Libya. Economic growth is not yet trickling down to the common citizen. 
This means economic growth is real — but not inclusive.
India spends:
According to the IMF, India’s rise will depend on:
India is now the 4th largest economy, and on track to be 3rd by 2028. But behind the global ranking, the average Indian still earns just $2,937 a year — placing the country 143rd in per capita GDP.
Growth is real, but not equal. Millions still face poverty, job insecurity, and limited access to healthcare and education.
The world sees India rising — but for many Indians, that rise is yet to reach them.
Explore the latest trends and tips in Health & Fitness, Travel, Life Hacks, Fashion & Beauty, and Relationships at Times Life!
This is the paradox of modern India. While its GDP touches the skies, its people still struggle for basics like health, education, clean water, and jobs
India’s economy is making headlines worldwide. According to the International Monetary Fund’s (IMF) World Economic Outlook report for April 2025, India will become the 4th largest economy in the world by the end of 2025 (FY 2025-26) in nominal GDP terms, overtaking Japan and sitting just behind the United States, China, and Germany.
This is no small achievement. Just over a decade ago, in 2014, India ranked 10th globally. It climbed to 5th place after surpassing the United Kingdom and is now on the cusp of overtaking Japan. India’s nominal GDP has more than doubled in these 11 years, reaching nearly $4 trillion in 2025 — a 105% increase since 2014.
The Growth Story: From 10th to 4th in Just Over a Decade
India replaces Japan as world’s 4th largest economy, poised to overtake Germany for 3rd rank.
( Image credit : IANS )
- India overtook the UK in 2022 to become the 5th largest economy.
- Now it has overtaken Japan — an economy that was 6 times larger than India in the year 2000.
- Projected to become the 3rd largest economy by 2027, surpassing Germany.
- GST reform unified a fragmented tax regime
- A boom in services, especially IT and fintech
- Government capex push in railways, roads, defense
- Young population driving consumption and entrepreneurship
- Surge in digital infrastructure: India now handles 46% of global real-time digital payments
But Per Capita Income Tells a Very Different Story
India Looks At Poverty And Unemployment Before The General Election.
( Image credit : Getty Editorial )
| Metric | India (2025 End) | Global Average | United States | Japan |
|---|---|---|---|---|
| Nominal GDP Rank | 4th | — | 1st | 5th |
| Nominal GDP | ~$4.1 trillion | — | ~$28 trillion | ~$4 trillion |
| Per Capita GDP (Nominal) | ~$2,950 | ~$13,000 | ~$85,000 | ~$34,000 |
| Per Capita GDP Rank | ~139th–143rd | — | 5th–7th | 25th |
| Multidimensional Poverty (2023) | 16.4% of population | ~6.1% (global est.) | <1% | <1% |
| Female Workforce Participation (2024) | 41.7% (rising) | 47% | 57% | 52% |
| Informal Employment Share (2023) | ~90% of workforce | ~60% (developing avg.) | ~10% | ~20% |
| Digital Payment Share (Global, 2023) | 46% of global volume | — | — | — |
| Projected Economy Rank (2028) | 3rd (overtaking Germany) | — | 1st | 5th |
The Arithmetic of Inequality
India is now the fourth-largest economy, surpassing Japan.
( Image credit : ANI )
India may be the 4th biggest economy, but it’s also home to:
- More poor people than any other country — over 230 million, according to the World Bank’s poverty line.
- The world’s youngest population, but over one-third of graduates remain unemployed.
- Five Indians hold more wealth than the bottom 700 million combined. (Oxfam, 2024)
This means economic growth is real — but not inclusive.
Education, Healthcare, and Basic Services Still Lag
- Just 2.9% of GDP on education
- Barely 2.1% on healthcare
- Brazil: 9.5% on healthcare
- South Africa: 6.8%
- USA: 17.8%
- Human Development Index Rank: 130 out of 191
- Infant Mortality Rate: 24.98 per 1,000 live births (vs. 3 in developed nations)
- Literacy Gap: 70% female literacy vs. 84% male
Structural Challenges Holding India Back
- 90% of the workforce remains in the informal sector, with no benefits or job security.
- Rural distress continues, with agriculture contributing just 16% of GDP but employing over 45% of the population.
- Urban inequality is worsening — luxury malls and billion-dollar towers rise next to slums with open drains and no piped water.
What Will Actually Make India the 3rd Largest Economy?
IMF
( Image credit : IANS )
- Sustained growth over 6% annually
- Manufacturing boost via “Make in India” and PLI schemes
- Massive infrastructure rollout — India aims to spend ₹111 lakh crore ($1.4 trillion) under the National Infrastructure Pipeline
- Digital productivity gains, especially in AI, fintech, and green energy
- Improved ease of doing business and judicial efficiency
The Promise and the Paradox of India’s Growth
Growth is real, but not equal. Millions still face poverty, job insecurity, and limited access to healthcare and education.
The world sees India rising — but for many Indians, that rise is yet to reach them.
Explore the latest trends and tips in Health & Fitness, Travel, Life Hacks, Fashion & Beauty, and Relationships at Times Life!