India’s GDP doubles in 10 years, now fifth-largest economy globally

India’s GDP doubled from $2.1 trillion to $4.2 trillion in 10 years

According to the IMF, India’s nominal GDP is set to increase from $ 2.10359 trillion (i.e. $2,103.6 billion) to an estimated $4.2719 trillion (i.e. $4,271.9 billion) in 2025.

This is a 103.08 percent increase in just 10 years.

Source: IMF data (the graph calculation is a percentage derived from Rounded figures)

The United States has experienced a growth of 65.82 percent, China witnessed a growth of 75.78 percent, and Germany grew by 43.74 percent.

However, Japan’s economy contracted by 1.25 percent (i.e., -1.25 percent) in the same period (according to the IMF’s October 2024 World Economic Outlook).

Based on nominal GDP, in 2014, India was ranked at Tenth (10th) place. However, in 2015, India climbed to two spots and was ranked as Seventh (7th) largest economy.

In 2021, it was ranked as the world’s fifth (5th) largest economy, thus marking a significant achievement in its economic growth.

 Factors that drove the economy

The major factors, which drove the economy, are:

1. Agriculture: Agriculture has shown strong resilience in the past decade, despite erratic weather conditions. This has maintained the agriculture output as well as rural income constant over the past decade.
2. Infrastructure: In the past decade, the government’s investment in infrastructure has increased massively. The Effective Capital Expenditure (which includes Grants-in-Aid for capital creation) has increased from 4.5 percent in 2016-17 to 15.5 percent in 2025-26 (BE). Overall Capital Expenditure of the government has also increased from 2.8 percent in 2016-17 to 11.2 percent in 2025-26 (BE).
3. Fiscal Deficit: By bringing the fiscal deficit to the acceptance level and concentrating on prudence, the government has been able to increase its expenditures on Capex.
4. Ease of Doing Business: Over the past 10 years, the government has taken measures to increase ease of doing business. Before the World Bank discontinued its Ease of Doing Business Report (DBR) in 2020, a DBR report was released in October 2019. According to this report, India ranked 63 out of 191 countries. Over five years, India’s rank in the DBR jumped from 142 in 2014 to 63 in 2019, a leap of 79 ranks. This shows how ease of doing business helped the economy have faster growth.

5.       Service Sector: The service sector was always a major engine of growth for India over the years. The last decade was not an exception to it. Strong growth has

been fuelled by service exports. Robust demand has driven exponential growth in both the logistics and retail sectors.

Conclusion

India seems ready to be among the top three economies in the world in the next decade. However, this can happen only when the present average growth of the economy continues over the next few years.

Given the rising economic risks and the looming fear of US tariffs, India must adhere to its fiscal prudence while monetary policy should support a higher growth trajectory.

Inflation is also a concern, which the policymakers should take care of, to achieve sustainable growth for the next few years.

(This article was first published in www.economicsmate.com)