New Delhi/Tokyo: A recent announcement by India’s NITI Aayog CEO B.V.R. Subrahmanyam made headlines, claiming that India has overtaken Japan to become the world’s fourth largest economy. But has India really overtaken Japan in terms of GDP in 2025, or is this claim premature? Based on data from the International Monetary Fund (IMF) and other reliable sources, let’s find out the truth.
IMF estimates and facts
According to the IMF's April 2025 World Economic Outlook report, India's nominal GDP is projected to reach $4.187 trillion in 2025, marginally higher than Japan's $4.186 trillion. This estimate points to India becoming the world's fourth-largest economy in 2025. However, a May 25, 2025 report by the New Indian Express says that this shift is expected to happen by the end of FY 2025-26 (April 2025-March 2026), and India is still behind Japan in 2024-25. India's GDP in 2024 was $3.9 trillion, while Japan's was $4.1 trillion.
According to the first advance estimate by India's Ministry of Statistics and Programme Implementation (MoSPI), India's nominal GDP for 2024-25 is projected to be ₹324 lakh crore (about $3.85 trillion, at an average exchange rate of ₹84 per dollar). This is still less than Japan's $4.026 trillion. The situation will become more clear when MoSPI releases fourth quarter GDP data on May 30, 2025.
India's Economic Progress
India has doubled its economy over the past decade, growing from $2.1 trillion in 2015 to $4.3 trillion in 2025. According to India Today, India crossed the $1 trillion mark in 2007, $2 trillion in 2014, and $3 trillion in 2021. It is now on pace to add $1 trillion every 1.5 years. India's growth rate of 6.2% (for 2025-26) makes it the world's fastest-growing major economy, while Japan's growth rate is projected to be just 0.6%.
India's progress is driven by factors such as strong domestic demand, young population, and 46% global share in digital transactions. India is expected to overtake Japan in the Asia Power Index in September 2024 to become Asia's third-largest power, reports Moneycontrol.
Japan's Challenges
Japan's economy has been facing stagnation for several decades. According to the Japan Times, Japan's GDP was $4.4 trillion in 2015 and will remain stagnant in 2025. A weak yen, an ageing population, and lagging digitalisation are the main reasons for this. In 2010, China overtook Japan to become the second-largest economy, and in 2023, Germany will replace it from the third spot.
Per capita income gap
Although India's overall GDP is on the verge of surpassing Japan, there is a huge gap in per capita income. India's per capita income in 2025 is around $2,880 (about ₹2.4 lakh), while Japan's is $34,000. "GDP does not mean growth. Japan has better healthcare, infrastructure, and a standard of living that India may take decades to achieve," wrote analyst Hardik Joshi in Business Today.
Exuberance and criticism on social media
Many users on X celebrated India's alleged milestone.@news24tvchannel posted on May 6, 2025, "India overtakes Japan to become world's fourth largest economy." However, @PratikVoiceObc taunted that Japan is four times ahead in per capita income of India, and India is ranked 140th.
Conclusion
India is on the verge of surpassing Japan in terms of GDP in 2025, but this milestone has not been officially achieved yet. Based on IMF estimates, this transition is possible by the end of FY 2025-26. India's rapid economic growth and Japan's stagnant economy are bringing this transition closer. However, the gap in per capita income and living standards is a big challenge for India. Will India maintain this pace and overtake Germany as well? The answer depends on the MoSPI data on May 30, 2025 and future policies.
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