India’s GDP has reached $4.18 trillion, surpassing Japan to become the world’s fourth-largest economy. It is expected to overtake Germany in the next 2.5 to 3 years, with a projected GDP of $7.3 trillion by 2030.
In Q2 of 2025-26, India’s GDP grew 8.2%, the highest in six quarters, reflecting resilience amid global trade uncertainties. Domestic factors, particularly strong private consumption, drove this growth. Real GDP growth accelerated from 7.8% in Q1 and 7.4% in Q4 of 2024-25. Real gross value added (GVA) rose 8.1%, driven by robust industrial and services sectors.
High-frequency indicators show strong economic activity in India, with low inflation, declining unemployment, and rising exports. Financial conditions remain favorable, with strong credit flows and robust urban consumption.
India, one of the fastest-growing economies, aims for high middle-income status by 2047. The RBI has raised its GDP growth forecast for FY 2025-26 to 7.3%. Domestic growth is driven by strong demand, tax reforms, lower crude oil prices, and favorable monetary conditions, with support from agriculture, GST reforms, and strong corporate balance sheets.
External factors, such as robust services exports and trade negotiations, provide additional upside. The current macroeconomic environment is a "goldilocks period" of high growth and low inflation.