SUNDAY, JUNE 01, 2025
Now India is 4th Largest Economy and on the Path of Leaving Germany
Published on May 26, 2025
By EMN
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- India has surpassed Japan to become world’s fourth largest economy with a GDP worth $4.187 trillion and is poised to overtake Germany in the next 2 to 3 years, according to NITI Aayog CEO B.V.R. Subrahmanyam. India’s impressive economic growth has been attributed to growth in the construction sector.
- The Central Government has given special focus on the construction sector over the last 11 years, placing roadways, rail transport, port construction and construction of residential buildings in the centre of its policies. It has benefited about 50 large areas of industrial sector including steel, cement, electricity, oil of the core sector. This has also resulted in a sharp increase in other sectors associated with it.
- India's rise to become the 4th largest economy in the world indicates a stronger global presence, more investment opportunities, and an increase in job creation.
- Achieving this milestone is a source of national pride, showcasing India's expanding international influence and economic capability. Nevertheless, this status brings with it an obligation to promote inclusive and sustainable growth, ensuring that every citizen benefits from the nation's enhanced position.
- India is being recognised as a significant global economic player, enhancing its influence in major forums such as the G20, IMF, UN, and WTO. As a result, multinational corporations are increasingly inclined to invest and collaborate with India. This enables the country to influence global trade regulations, environmental discussions, and technology standards.
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- What does this mean for India?
- 1. This rating can enhance investor confidence, both domestic and international, leading to a surge in Foreign Direct Investment (FDI). The stock market usually sees improved performance as global funds are attracted to a rapidly growing economy.
- 2. This will position India as a favourable alternative to China for global supply chains, resulting in increased foreign direct investment (FDI) in sectors such as manufacturing, technology, retail, and infrastructure.
- 3. Employment and Opportunities: A thriving economy leads to growth in industries, infrastructure, and services, which in turn creates new jobs and entrepreneurial possibilities. This will enhance employment, particularly in areas like construction, services, and green energy. A larger economy also produces greater tax revenues, which allows for increased spending on roads, railways, digital connectivity, and urban development.
- 4. Growth in National Income: With the rise in economic output, tax revenues increase, enabling the government to dedicate more resources to welfare, infrastructure, and development.
- 5. Improved Credit Ratings and Loans: A better ranking often results in enhanced credit ratings, which makes it easier and more affordable for India to acquire funds for development projects.
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- Challenges
- 1. Prosperity for Everyone: Although India ranks as the 4th largest economy, its per capita income remains significantly lower than that of developed nations. Disparities—between rural and urban areas, affluent and poor communities, as well as educated and uneducated populations—continue to pose challenges.
- 2. Infrastructure and Human Development: There is still a pressing need for substantial advancements in healthcare, education, and infrastructure. The advantages of economic growth must extend to all segments of society.
- 3. Jobless Growth and Inflation: When growth occurs without generating jobs, it results in jobless growth. It is essential to address inflation, climate change, and urban pressures as India continues to develop.
- Now, India should be ready for the fourth phase of industrial development where automation will play the biggest role. In order to ensure better quality of its products in terms of America, China, Taiwan and other European countries, it will also have to become the leader of a circular economy.
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- Prof Mithilesh Kumar Sinha
- Department of Economics
- Nagaland University, Lumami
Nagaland Districts
