India has officially surpassed Japan to become the world’s fourth largest economy, according to a statement from BVR Subrahmanyam, CEO of India’s National Institution for Transforming India (NITI Aayog). Citing the latest IMF data, Subrahmanyam confirmed India’s GDP now exceeds $4 trillion, marking a significant milestone in the country’s economic ascent. The senior policymaker projected that India will overtake Germany to claim third position within the next three years, maintaining its trajectory as one of the fastest-growing major economies globally.
The announcement came during a high-level meeting of NITI Aayog, India’s premier policy think tank that coordinates economic strategy between the central government and state administrations. Subrahmanyam attributed this achievement to structural reforms implemented since 2014, including the Goods and Services Tax (GST) and production-linked incentive schemes that have boosted manufacturing output. However, economists caution that while India’s aggregate economic size is expanding rapidly, its per capita income of $2,850 remains far below developed nations, highlighting persistent development challenges.
Despite the optimistic outlook, India faces substantial hurdles including 23% youth unemployment, widening trade deficits, and the need for deeper labor market reforms. The country’s demographic dividend – with 65% of the population under 35 – presents both opportunity and pressure to create quality jobs. As global economic power dynamics shift, India’s ability to maintain macroeconomic stability while addressing these structural challenges will determine whether it can secure and sustain its position as the world’s third largest economy.
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