India Enters Top 4 Global Economies, Yet Questions of Equity Persist
Large-Scale Economy Expansion: A Significant GDP Advance, Yet Questions Arise on Inclusion and Beneficiaries - Is Inclusive Growth Achievable?
In 11 years, India has swiftly risen from being the tenth-largest economy in 2014 to the fourth-largest in 2025, according to the International Monetary Fund (IMF). The country's Gross Domestic Product (GDP) has nearly doubled during this period, with an estimated value of $3.9 trillion in 2024, up from $2 trillion in 2014. The IMF expects India's nominal GDP for FY26 to reach around $4.187 trillion, surpassing Japan's estimated $4.186 trillion, placing India fourth in the global rankings.
The IMF World Economic Outlook report for April 2025 projects India's economic growth at 6.2 percent in 2025 and 6.3 percent in 2026, outpacing global and regional peers. Moreover, the Reserve Bank of India's (RBI) balance sheet expanded by 8.20 percent YoY to Rs 76.25 lakh crore in FY25, as per the annual report. However, India's economic growth for FY25 was estimated at 6.5 percent, marking the slowest rate since the Covid-19 pandemic.
India's macroeconomic indicators have shown a positive trend, thanks to prudent fiscal and monetary policies, the expansion of its service sector, flourishing tech industry, and strong domestic demand. The implementation of the Goods and Services Tax (GST) in 2017 and corporate tax cuts in 2019 have improved the business environment, attracting investments and boosting economic activity. The manufacturing and construction sectors have contributed significantly to GDP growth, reflecting increased industrial activity and infrastructure development.
Government initiatives like 'Make in India' have spurred industrial growth and infrastructure development, while geopolitical shifts, including US-China trade tensions, have positioned India as an appealing investment destination.
Despite this impressive growth, experts such as Manoranjan Sharma, Chief Economist at Infomerics Ratings, caution that the need for an equitable and broad-based growth model remains critical. Sharma highlighted that India's per capita GDP still appears low in comparison to other countries. In terms of purchasing power parity (PPP), India was the third-largest economy before the current government took office, with only China and the United States ahead.
Notably, India's per capita GDP remains significantly below the global average, despite boasting the world's largest population. High levels of informal employment (approximately 90 percent of the workforce) and low female workforce participation (26 percent compared to the global average of 47 percent) have limited per capita gains. However, unemployment has decreased steadily, with the rate dropping from 8.9 percent in 2018 to 4.9 percent in 2025, according to IMF data.
To achieve more inclusive and sustainable economic growth, India should prioritize skills development, employment generation, financial inclusion, technological advancement, and MSME sector development to create broad-based economic growth that benefits all sections and regions of society. Strengthening rural connectivity and infrastructure is also vital to addressing inequality and fostering equitable economic development. In conclusion, India's upward economic trajectory is undeniable, but ensuring that growth benefits all segments of the population will be the key to unlocking its true potential as a major global power.
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The IMF predicts India's nominal GDP for FY26 to reach $4.187 trillion, surpassing Japan, further solidifying India's position within the global market.
India's economic growth rate for FY25 was estimated at 6.5 percent, marking a slowdown since the Covid-19 pandemic, but still outpacing many global and regional peers.
Despite India's economic advancement, the need for an equitable and broad-based growth model, addressing issues like low per capita GDP and high levels of informal employment, remains crucial for a sustainable and inclusive economy.
In the realm of digital finance (DeFi), India's growing economy, expanding business environment, and improvement in the finance sector present an attractive prospect for potential investors, contributing to the nation's overall economic stability and progress.
