A snapshot of Tokyo's skyline.
New Delhi: There is an ongoing debate over whether India has indeed overtaken Japan in Gross Domestic Product (GDP) size or is yet to do so.
Firstly, why has such a theory sparked debate in the first place? We will find answers to these in this article. We will also see what it means if India is indeed the fourth-largest economy in the world, relegating Japan to fifth spot.
What does IMF data say?
The debate started when NITI Aayog CEO BVR Subrahmanyam, in a recent press briefing, stated: “We are the fourth largest economy in the world as I speak. This is not my data, this is IMF data. India is larger than Japan.”
The remark swiftly became viral. There were celebrations on one side, while on the other side, debates ensued.
The claim sparked circumspection too, as many people argued that India was yet to overtake Japan’s GDP. Some said the “pro-India brigade” looked only into the International Monetary Fund’s (IMF) World Economic Outlook (April 2025 data) rather than looking into the IMF’s data.
Does that mean that they are wrong? Not really.
The CEO of NITI Aayog credited IMF data to back his claim. Let us, however, look into what IMF data shows. The following table is ranked as per GDP, current prices (US dollars in billions)
Rank | GDP, current prices ($ in Billions) | 2025 |
1 | United States | 30507 |
2 | China, People’s Republic of | 19232 |
3 | Germany | 4745 |
4 | India | 4187 |
5 | Japan | 4186 |
6 | Southeast Asia | 4123 |
7 | United Kingdom | 3839 |
8 | France | 3211 |
9 | Italy | 2423 |
10 | Canada | 2225 |
Source: IMF data mapper — Author Worked Table as per data
The same is depicted in the graph, for easy understanding. So, does this mean that India has indeed overtaken Japan’s GDP?
One may argue that the data clearly shows India in fourth spot and has overtaken Japan, which is ranked fifth.
However, we need to understand that the IMF data mapper for 2025 is a only a projection, rather than an actual figure.
Source: Author Worked graph as per IMF data mapper
On 31 May 2025, the Ministry of Statistics and Programme Implementation (MoSPI) estimated India’s nominal GDP for FY25 to be ₹330 lakh crore. When we calculate it at an exchange rate of ₹84 per dollar, this would translate into roughly around $3.85 trillion, which means India is still behind Japan in terms of GDP.
What does it mean?
According to the IMF’s projections, India is expected to surpass Japan as the fourth-largest economy in the world before the end of 2025 and is also projected to overtake Germany by the end of 2028 to become the third-largest economy globally.
This means India’s GDP will be much larger than what it is now. Nevertheless, just becoming the fourth largest economy in the world doesn’t mean India can be complacent.
Why?
Because, when it comes to per capita GDP, India is well below Japan.
There is a substantial difference in living standards and economic development between India and Japan. Despite the potential edge in GDP sizes, the projected per capita income shows vast disparity — approximately $2,900 for India in comparison to $34,000 for Japan.
India needs to work on strengthening its manufacturing sector and technological advancements. This will not only address its unemployment problems but also improve the standard of living of its people to a certain extent.
Therefore, India still has a long way to go before it can stand should-to-shoulder with Japan.
India’s agriculture sector needs more improvement as it is still a major player in the economic growth story of the country.
In addition, strong infrastructure is required for any economy to be known as a developed nation. Therefore, India requires huge capital expenditure on these fronts.
The urban-rural gap also needs to be narrowed. Strong social indices are one of the best indicators of a developed country. Therefore, India needs more investments in its social sector to improve its human capital.
By doing so, we may reduce social imbalances to a greater extent. This will also help India fulfil its dream of becoming a $7 trillion economy by 2030.
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