Key Highlights:
- It is estimated that India’s GDP would grow by 6.5% in FY25, marginally greater than the earlier projection of 6.4%.
- Revised one percentage point up for FY24 GDP growth as its economy began showing stronger performance.
- So, India now stands as having economy of ₹331 trillion ($4.2 trillion in FY25) and thus is getting closer to Japan’s $4 trillion GDP (2024).
- Looking at Japan’s steady and slow growth, it appears that India would soon overtake Japan’s economy in 2025.
India’s GDP Growth vs. Other Major Economies
| Country | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024* |
|---|---|---|---|---|---|---|---|---|
| India | 6.8 | 6.5 | 3.9 | -5.8 | 9.7 | 7.6 | 9.2 | 6.5* |
| US | 2.4 | 3.0 | 2.6 | -2.2 | 6.0 | 2.5 | 2.9 | 2.8 |
| China | 6.9 | 6.7 | 5.9 | 2.2 | 8.4 | 2.9 | 5.2 | 5.0 |
| Japan | 1.7 | 0.6 | -0.4 | -4.2 | 2.7 | 1.1 | 1.5 | 0.1 |
India’s figures are based on financial years (April-March).
India’s Economic Expansion in Dollar Terms
| Year | GDP ($ Trillion) |
|---|---|
| 2017-18 | 2.65 |
| 2018-19 | 2.70 |
| 2019-20 | 2.84 |
| 2020-21 | 2.67 |
| 2021-22 | 3.17 |
| 2022-23 | 3.35 |
| 2023-24 | 3.64 |
| 2024-25 | 3.91 |
Revised estimates and exchange rate fluctuations have been accounted for in this projection.
Major Issues
- Middle income trap
- Though growth is rapid, India is still trapped in the lower middle income category.
- Rupee depreciation may get a real iGDP effect if it shows annual decline of about 2.25% against the dollar.
- Sustained growth is needed
- Policy support, infrastructure investment, and strong domestic demand are the means needed to drive continuity.
With steady growth along with favorable conditions in the world, India is going to overtake Japan, which will become the fourth largest economy by 2025. Only the US, China, and Germany will then be ahead of it.
Source: BS
