India becomes world’s 4th largest economy, surpasses Japan | Aims to overtake Germany by 2028

India becomes world’s 4th largest economy, surpasses Japan | Aims to overtake Germany by 2028

Namaskar and thank you for joining us now on the economic brief our weekly program on news related to the economy from an Indian perspective of the world. On the show this week, India becomes the fourth largest economy in the world in nominal GDP terms surpassing Japan. What’s the trajectory pointing to? Political instability is causing Bangladesh’s economy to slide faster than expected. Some predict an imminent collapse. Prime Minister Modi declares India’s northeast as Ashta Lakshmi, the eight manifestations of goddess Lakshmi of India. And $47 billion are bound that way after the rising northeast summit. The US President Donald Trump’s tariff plans, they face more judicial scrutiny while his big beautiful spending bill has found Elon Musk quitting the administration. Before we move on, here’s Prime Minister Narendra Modi speaking about the fact that Sikkim is a complete package as far as tourism potential is concerned. Now Sikkim is one of the eight states of the northeast. Sikkim global tourism destination complete package. Shanti, Kanjanga National Park, UNESCO, World Heritage Site. Well, now let’s take a look at India as the fourth largest economy in the world. Coming up behind me are a few slides that will show us how this has happened. This is IMF data that is showing that India is overtaking Japan. India is the world’s fourth largest economy. Currently India’s value is at about 4.919 trillion US and that’s based on current prices. So India and Japan are more or less at the same level in terms of the size but India of course is growing faster and is seen as a larger economy. Moving on to our next slide we can see that uh let’s look at the top five economies of the world. This is in terms of nominal GDP. The US is the number one economy at $30.51 trillion US. China follows it with 19.23 trillion. Germany is at $4.74 trillion. India is at $4.19 trillion. Japan 2 is at about $4.19 trillion. But if we look at PPP which is purchasing power par then uh China is at $39 trillion is actually the largest economy in the world and then India is number three at $17 trillion in PPP. So India has targets now of course India in this year itself is expected to reach $4.28 trillion this fiscal so taking it ahead of Japan and Japan is likely to contract slightly in fact you know we have that concept of what’s called Japanification where Japan doesn’t seem to be growing at all so Japan is likely to contract slightly to about $4.18 trillion and India aims in fact to overtake Germany by 2028 so Germany at currently is about 4 78 trillion. In fact, by 2030, India hopes to be a 7 trillion economy. So, India of course is looking at maintaining a high growth momentum and reaching 7 trillion by 2030. We of course have the vision, the Vix Barat vision for 2047. We can see that India hopes to see become a $30 trillion economy by then. for it to of course also achieve the uh developed country status India needs to have high income status. Currently India is actually in the middle income status in fact in the lower middle income status just about reaching the middle income status the upper middle income status which is uh you know about $4,500 to $13,000 in the upper middle income status. The high income status for per capita income would be $14,000 per capita and above. But if you look at purchasing power parity, India is already actually at about $12,000 US purchasing power parity. So per capita income, India is hoping to reach about 18,000 to 20,000 US. This is uh when of course we reach 2047. At that time we hope to be a highincome economy. And we how’s it going to work? It’s going to happen because we’re going to be expanding manufacturing, accelerating artificial intelligence, fintech and smart city development. All this as we know are already in place. These things are happening. Investments are taking place in renewable energy. India is moving fast in this direction. Infrastructure growth that multiplier effect that all happening. High-speed rail, highways and urban development is taking place rapidly. So, uh, later in the program, we’re going to get you a story about, uh, you know, the rough road that the US President Donald Trump is facing with his tariff policies. But here’s President Trump explaining that his policies actually have set the ground for negotiations. You mean because I reduced China from 145% that I set down to 100 and then down to another number and I gave the European Union a 50% tax uh tariff and they called up and they said please let’s meet right now. Please let’s meet right now. And I said okay I’ll give you till J. I actually asked them I said what’s the date? Because they weren’t willing to meet. And after I did what I did, they said, “We’ll meet anytime you want and we have an end date of July 9th. You call that chickening out.” Six months ago, this country was stone cold dead. We had a dead country. We had a country people didn’t think it was going to survive. And you ask a nasty question like that. Uh it’s called negotiation. You said a number. Well, we are privileged to have with us the eminent economist Professor Sachin Chhaturvedi who is the vice chancellor of Nalanda University. Thank you very much uh Dr. Chhaturvei. Now you know the next milestone on the way I was explaining it a bit is going to be Germany. Currently it’s about $4.7 trillion. When should that happen in your opinion? I think we are fast on track mark and probably what seems to be a great possibility uh is in terms of as IMF has predicted 27 28 would be a crucial year for India to retain the position that we have earned just now by bypassing uh uh uh Japan and I think uh it would help us stabilize uh this position consolidate the position and then I think we should think of uh uh crossing that but more than that Mark I think uh it is important for us uh uh to bring in expansion of economy the way we have been thinking in terms of not just per capita income but as prime minister has suggested to make the process more inclusive us Dr. Nilanjan Barek who’s joining us uh he’s an eminent economist who’s joining us from Hyderabad but uh you know what is the next milestone overtaking Germany? Germanyy’s at about $4.7 trillion currently. Uh when should that happen in your opinion? this is going to happen by uh next year because if you look into the growth rate and try to juxttopose that growth rate uh vis Germany uh we are going to reach that stage pretty soon. Uh what is needed at this point of time? Uh we have now become a big market in terms of market size. We have become a big market. But what is needed at this point of time how to increase per capita income and for that what is necessary is whether government of India like what they are doing to give more emphasis on the manufacturing sector so as to create more jobs in that way that is going to increase the per capita income that what we are seeing right now. Okay. Because even if you look into terms of purchasing power parity uh we are doing pretty well. So the next milestone just to say is how we can go from lower middle income to higher uh middle inome economy and of course uh eventually graduate to a high income economy. Dr. Bonnik, you mentioned purchasing power parity. Now per capita we are already about over $10,000 annually and some would argue that purchasing power parity is a better gauge. It’s a more realistic gauge of economic potential. So I mean by purchasing power parity India’s economy is already about 15 trillion uh dollars and above. Uh so putting us already in the third position. What is the you know the the momentum that we can gain from this kind of an analysis? Almost it makes sense to kind of compare economy on the basis of purchasing power because what purchasing power suggest you are taking into account the cost of difference in living across various countries in the world. So for instance, if you’re living in US with $1,000 of income, um it is basically suggesting that in India to leave the same type of lifestyle, you may be requiring $200 of income because the cost of non-tradables in the US be it in terms of services, healthare, education, these are non-tradable items. These are the items which we cannot trade which are quite high and that’s actually put why the living standard cost of living standard is so high in US we service India so if you really want to do appletopple comparison I think it’s more scientific to take into account this purchasing power parity we have Dr. Sachin Chhaturvei with us as well uh the vice chancellor of Nalanda University Dr. Chhaturui you know the dollar value too has moved from about uh 72 rupees to 85 rupees over the last 5 years. So will the rupee be getting stronger you know if if our economy gains strength or what would you say because at the end of the day we are judging our economy in the size of uh of the US dollar and obviously if we put it in rupee terms I mean we think it’s growing much faster. Mark if you see the currency trend over last two years on an average India’s currency has performed consistently well we have seen the stability and we have seen in a way predictability uh that last two years trends have shown if you compare it with many other global currencies you find that they have depreciated uh beyond the uh range that usually those currencies have followed. So India’s uh foreign exchange management the role that institutions have played in India to to bring in a greater coherence in monetary and fiscal policy I think has played an extremely important role. So the point that in in days to come as uh we go up the ladder and the point that we discussed earlier in terms of how this stability and how this predictability in the uh trends and foreign exchange would determine both uh not only the pace at which economy is growing but also the inclusive character of it and that probably for a size of India’s uh population we would have to bring in a far greater uh cohesive and inclusive approach and that’s where uh the the economic growth and and and ranking of economy would matter. Well, Bangladesh aims to transition to an upper middle inome country by 2031 but uh the current political instability and unrest are sending the economy into a downward spiral. Bangladesh has historically shown uh economic resilience but the current crisis is exacerbating financial risks including pressure you know on foreign reserves also credit rating uh downgrades and disruptions in key industries like the garment industry. Let’s take a look at this report. Bangladesh is battling both political turmoil and economic collapse as industry leaders warned that the worsening power and gas crisis threatens to shut down factories, trigger mass layoffs and accelerate financial defaults. Nobody is supporting what Muhammad Ununis is doing because all that he has done, he has tried to ruin the relationship with India. He has tried to stop the trade with India. As a result, factories in Bangladesh are closing down. There is unemployment. And there are high prices because if you don’t import from India, from wherever else you import, the prices are much higher. Factory closures are rising amid severe gas and electricity shortages. Offshore drilling and coal extraction are deteriorating, fueling fears that half of all factories could shut down within months. With interest rates at 14 to 15%, businesses face financial ruin while the country struggles under a mounting debt burden. You see, we have to have the loan repayment. is a big chunk of money goes away every year and the economy is really suffering because the investment is also not coming. The youth have taken it upon themselves to fill a political vacuum. The National Citizen Party NCP was officially launched on February 28, 2025. Making history as Bangladesh’s first studentled political party. It emerged from the students against discrimination movement and the Jatya Nagoric committee which played a key role in the July 2024 uprising. Since we have formed a political party, we do have aspirations for power. However, we will engage in pragmatic politics. We are aware of our limitations, but we have entered the field with a long-term vision. Our goal is not just this election or the next five or 10 years. Rather, our dream spans the next 50 to 100 years. The National Citizen Party’s vision 2035 outlines a shift towards a green high-tech economy. Key proposals include a one-stop digital investor center, zero tariffs on capital goods and high-tech industries, and a 10-year tax holiday for strategic sectors like semiconductors, AI, and renewable energy. They aim to fully embrace industry 4.0. zero through special economic zones dedicated to AI, IoT, software and renewable energy. They have decided to form a party. Most welcome. I think all the political parties have welcome them to form a political party. But I would like to caution them. Don’t form a king’s party. Regardless of leadership, Bangladesh faces a political vacuum and mounting economic challenges. Inflation nearing 10%, weakening exports, an energy crisis, and rising unemployment. The Taka’s sharp depreciation is driving up import costs, adding pressure on an interim government struggling to restore confidence in the economy. The economic brief, DD India. Talking about our second topic, which is about Bangladesh’s economy uh you know going through a bit of a crisis at the current time. Uh Dr. Chhaturvedi do you see Bangladesh falling into the Chinese jet debt trap? This is very unfortunate situation Mark we are ending up with. We have seen how the free trade agreement of Maldives landed up Maldives in a situation where eventually the government had to work and and Maldives themselves had to assert against uh the purchasing commitments that were done. We have seen what has happened in Sri Lanka. The uh the assertion by Sri Lankan economy by the central bank of Sri Lanka. We have seen they have salvaged the economy. Yes. Unfortunately similar trend now is discernable in our own neighborhood. Now in case of Bangladesh countries after countries indebtedness and inability to manage the fiscal crisis that these countries are going through. Unfortunately if you see mark exports are consistently declining in Bangladesh. Indeed. Indeed. People have gone below poverty line. uh a large number of people have already jumped in across that line and we are seeing that uh unrest is multiplying in this situation consistent borrowing from China is going to create far greater problem for Bangladesh economy indeed uh Dr. Dr. Banik, you know, can anything move forward in Bangladesh if what is seen as an interim arrangement seems to be looking like an indefinite arrangement there in Bangladesh? Uh because the interim government continues is not calling an election and also the youth who were part of this movement to start with they are also getting restless and they’ve entered politics, they’ve formed parties and all that. What do you think is likely to be the outcome of all this in terms of the economy? What’s happening in Bangladesh is unfortunately is uh most of the productive assets are getting lost because if you see what is their major exports item it’s textile and most part of the intermediate inputs be it cotton be it uh yan actually goes from India to Bangladesh now because what Mr. Ununice is trying to do. He is actually trying to take sides more with Pakistan and China and in the process try to disrupt the supply chain which is happening between India and Bangladesh. What we see is uh in terms of the basic input items be it cotton, be it yarn also fruits, vegetables all these items uh they are now we are seeing a supply chain disruption. Thank you very much both uh Dr. Banik and Dr. Chhatureli, thank you for joining us on the economic brief brief this week and helping us understand these topics. But the rising investors summit which 2025 took place in the northeast. It marked a breakthrough in unlocking the northeast’s untapped potential as India purchase uh pursues a 30 trillion economy by 2047. from the northeast in fact is emerging as a crucial gateway for trade connectivity and investment with major infrastructure projects advancing and the act east policy initiatives expanding the region is in fact undergoing a rapid transformation solidifying its role also as India’s strategic link to Southeast Asia and the ASEAN Ammon Kumaru Kumar Himanchu reports northeastern India is a region known for its rich and diverse culture, history and ecology. With its strategic location, natural resources and distinctive topography, the eight northeastern states, Assam, Arunachal Pradesh, Manipur, Megalia, Misuram, Nagalan, Sikkim and Tripura are often referred to as the country’s gateway to Southeast Asia. The rising northeast investors summit 2025 held last week in New Delhi highlighted prime minister Modi’s determination to ensure that Gojhati, Agertala, Imal and Shillong become the Delhi, Mumbai, Bengaluru and Hyderabad of the northeast infrastructure revolution. Northeast. Northeast land of opportunities. Connectivity infrastructure 11,000. The two-day investor summit drew an unprecedented investment proposal of over 4 lakh cr or 47 billion. Union Minister Jotra Ditenda called it the beginning of a new chapter in the region’s development. Industry leaders MKkesh Amani chairman of Reliance Industries, Goautam Adani, chairperson of Adani Group and Anil Agraal, chairman of Vidanta collectively announced investments worth more than 1 lak 55,000 cr rupes or $18.2 billion to explore opportunities in the region. The northeast is not just rising but to my mind it is roaring. I make six commitments to the chief ministers of Arunachal Pradesh, Assam, Manipur, Megallay, Misoram, Nagaland, Sikkim and Tripura. First Reliance has invested up around rupees 30,000 crores in the region in the past 40 years. In the next 5 years, we will more than double our investments with our target at 75,000 crores. India’s northeast is emerging as a key driver in its pursuit of a $30 trillion economy by 2047 serving as both a growth engine and a strategic corridor. Prime Minister Modi’s vision recognizing the eight states as Ashtto Lakshmi positioning them at the heart of India’s regional and global ambitions. With trade between India and ASEAN set to grow from $125 billion to $200 billion over the next decade, the act east policy finds a natural ally in the northeast. Aman Kumar Himmanu for the economic brief DD India. In a major legal setback for the president of the United States and his trade policies, the a US court has blocked most of his sweeping tariffs uh ruling uh that the use of emergency powers is unconstitution unconstitutional. Meanwhile, Elon Musk has abruptly stepped down from the leadership of the Doge and from the Trump administration’s uh and efficiency drive. Here’s Dipan Shukashab with the details. We leave you with this report. Thank you for watching the economic brief. Namaskar. A US federal court has blocked most of President Donald Trump’s sweeping tariffs, ruling that his use of emergency powers to impose broad import duties was unconstitutional. The court emphasized that Congress holds exclusive authority to regulate trade and struck down the 10% baseline tariff and higher duties on countries like China and the European Union. The ruling followed lawsuits from states and small businesses arguing that tariffs threatened their survival. The court invalidated higher duties on imports from Canada, Mexico, China, and the European Union. Legal challenges came from 12 US states and five small businesses impacted by the tariffs. Trump justified the tariffs by declaring the US trade deficit a national emergency under the international emergency economic powers act. However, the court ruled this exceeded presidential authority calling it unconstitutional. The White House appealed the decision, criticizing interference by unelected judges while Trump’s aids leveled the ruling a judicial coup. Analysts say this decision disrupts tariff plans and increases uncertainty but leaves some sector specific tariffs and paused China levies in place with trade negotiations ongoing. In another setback for the Trump administration, Elon Musk resigned from leading the Department of Government Efficiency after roughly 130 days. His tenure saw nearly 260,000 federal job cuts, though many reductions were temporarily blocked by courts. Musk’s public criticism of Trump’s recent tax and spending bill reportedly hassened his departure. Tesla faced 13% sales drops in first quarter of 2025 and a 10% stock decline amid protests targeting the company. Musk plans to scale back political spending and refocus on his businesses highlighting the difficulties private leaders encounter in government reform amid political and legal challenges. Dipanu Kashab’s report for the economic brief DD India.

India has surpassed Japan to become the world’s fourth-largest economy. India is now poised to displace Germany from the third rank in the next 2.5 to 3 years. 

The IMF in its recent report has said that India will remain the world’s fastest-growing major economy. On The Economic Brief, our experts analyze India’s achievement and Purchasing power parity.

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