India Set To Become Third-Largest Economy By 2030

India has emerged as the world’s fourth-largest economy with a GDP of $4.18 trillion, overtaking Japan. Official projections now indicate that India is on track to surpass Germany within the next three years, reaching an estimated GDP of $7.3 trillion by 2030. This milestone reflects sustained economic momentum despite global trade and policy uncertainties.

Strong GDP Growth In FY 2025–26

India’s real GDP grew by 8.2 per cent in the second quarter of FY 2025–26, marking a six-quarter high. This follows growth of 7.8 per cent in the previous quarter and 7.4 per cent in Q4 of FY 2024–25. Real gross value added (GVA) also expanded by 8.1 per cent, driven largely by industrial output and services sector expansion, highlighting the economy’s resilience.

Domestic Demand As Key Growth Driver

Robust private consumption has remained central to India’s growth story. High-frequency indicators suggest sustained activity, with declining unemployment, improving export performance, and strong credit flows to the commercial sector. Urban consumption has strengthened further, supported by stable financial conditions and benign inflation, which has stayed below the lower tolerance threshold.

Policy Support And Reform Momentum

Growth has been reinforced by income tax and GST rationalisation, softer crude oil prices, and front-loaded government capital expenditure. Supportive monetary and financial conditions have also played a critical role. The Reserve Bank of India has revised its GDP growth forecast for FY 2025–26 upward to 7.3 per cent from 6.8 per cent, citing strong macroeconomic fundamentals.

Imporatnt Facts for Exams

• India became the world’s fourth-largest economy in nominal GDP terms in 2025.
• Real GDP growth reached a six-quarter high of 8.2% in Q2 FY 2025–26.
• The RBI revised FY 2025–26 growth forecast upward to 7.3%.
• India aims to achieve high middle-income status by 2047.

Outlook Towards A ‘Goldilocks’ Phase

Looking ahead, favourable agricultural prospects, strong corporate and bank balance sheets, and ongoing reforms are expected to sustain growth. Services exports remain robust, while progress in trade and investment negotiations offers additional upside. The current macroeconomic environment has been described as a rare “goldilocks period” of high growth combined with low inflation, positioning India among the fastest-growing major economies globally.