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India has officially become the fourth largest economy in the world, leaving behind Japan. CEO BVR Subrahmanyam of NITI Aayog gave this information at a press conference on 24 May. India has achieved this achievement due to its economic policy.
Citing the International Monetary Fund ie, IMF data, Subrahmanyam said, “When I am speaking, we are the fourth largest economy. We are 4 trillion economy. Today India is bigger than Japan. Now only America, China and Germany are bigger than India.”
CEO of NITI Aayog also said that if we stay on our plan and thinking, then in 2.5-3 years we will become the third largest economy.
Question 1. How did India gain the place of the fourth largest economy leaving Japan behind?
answer: According to the IMF’s World Economic Outlook report of April 2025, India’s Nominal GDP has reached 4.187 trillion dollars, which is slightly higher than Japan’s estimated GDP 4.186 trillion dollars.
India’s achievement is due to strong domestic demand, favorable demographic trends, and policy reforms. India’s economy is maintaining an annual growth rate of 6-7%, while Japan’s economy has suffered losses due to global trade tension and policy change.
Question 2. What will be the impact of this achievement of India on global synario?
answer: India’s fourth largest economy will have many impacts on the global level:
- Increase in global impact: India’s impact will increase in international forums such as G20 and IMF.
- Investment Hub: Foreign Direct Investment (FDI) will increase further in India, as global companies are seeing India as an attractive market.
- Regional stability: Strong strategic partnership between India and Japan, such as Chandrayaan-5 and military cooperation, will promote stability in the Indo-Pacific region.
- Economic Leadership: India’s move brings him closer to the direction of Global Economic Leadership, especially when he is leading Germany left behind by 2028 to become the third largest economy.
Question 3. Why is Japan’s economy lagging behind?
answer: Japan’s economy is facing many challenges:
Low Growth Rate: According to the IMF estimate, Japan’s GDP growth rate in 2025 is expected to be only 0.3%, which is much lower than India’s 6.5%.
Demographic crisis: Japan’s aging population and low birth rate have limited the labor force.
Global Trade Tension: Tariffs and trade policies imposed by the US and other countries have affected Japan’s export-based economy.
Lack of economic stability: Japan’s economy has been struggling for stability for several decades, due to which it has lagged behind from fast growing countries like India.
Question 4. Can India soon become the third largest economy?
answer: Yes, according to estimates from IMF and other global institutions, if India’s current growth rate persists, India can become the third largest economy in the world by 2028, leaving behind Germany (4.9 trillion GDP).
India’s GDP is expected to reach $ 5 trillion by 2027 and $ 5.58 trillion by 2028. After this, only the US (30.57 trillion dollars) and China ($ 19.231 trillion) will be ahead of India.
Question 5. What will be the effect of this Economic Boom of India on the common people?
answer: India’s economic progress can have many positive effects on the common people:
- Employment opportunities: Rapid growing economy will create new jobs, especially in technology, manufacturing, and service sector.
- Better standard of living: Increased GDP and investment will improve infrastructure, health, and education.
- Kanjummer Power: Increased income and expansion of middle class will increase demand for consumer goods and services.
- Challenges: There may be challenges like uneven distribution and inflation, which will have to be addressed to the government.
What is GDP?
GDP is used to track economy health. It shows the value of all the goods and service created within a fixed time within the country. It also includes foreign companies that produce by staying inside the country’s border.
There are two types of GDP
There are two types of GDP. Real GDP and Nominal GDP. In real GDP, the calculation of goods and service values is performed at the value or stable price of the base year.
Currently, the base year is 2011-12 for calculating GDP. At the same time, the calculation of nominal GDP is done at the current price.
How GDP is calculated?
A formula is used to calculate the GDP. GDP = c+g+i+NX, here C means private conjpction, G means government spending, I mean investment and NX means net export.
Who is responsible for GDP’s grip?
There are four important engines to reduce or increase GDP. The first is, you and us. The more you spend, it contributes to our economy. The second is the business growth of the private sector. It contributes 32% to GDP. The third is government expenditure.
This means how much the government is spending in producing goods and services. It contributes 11% to GDP. And the fourth is, net demand. For this, India’s total exports are reduced by total imports, as India has more imports than exports, so its impact is negative on GPD.
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