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India on track to displace Germany from third rank in next 2.5-3 years: Govt
Dec-30-2025

The government in its latest release has said that India has reached a new milestone, overtaking Japan to become the world’s fourth-largest economy, with GDP valued at $4.18 trillion. With strong growth momentum, India is now on track to displace Germany from the third rank in the next 2.5 to 3 years with projected GDP of $7.3 trillion by 2030. It also stated that India is among the world’s fastest-growing major economies and is well-positioned to sustain this momentum. With the ambition of attaining high middle-income status by 2047- the centenary year of its independence- the country is building on strong foundations of economic growth, structural reforms, and social progress.

As per the release, India shows resilience despite persistent global trade uncertainties, with GDP expanding to a six-quarter high in Q2 of 2025-26. India’s real GDP grew 8.2% in Q2 FY 2025-26, up from 7.8% in the previous quarter and 7.4% in Q4 of 2024-25, led by resilient domestic demand amidst global trade and policy uncertainties. Real gross value added (GVA) expanded by 8.1%, catalysed by buoyant industrial and services sectors. The government further noted that high-frequency indicators point to sustained economic activity with inflation remaining below the lower tolerance threshold. Unemployment is on a declining trajectory, and export performance continues to improve. Furthermore, financial conditions have stayed benign, with strong credit flows to the commercial sector, while demand conditions remain firm, supported by a further strengthening of urban consumption.

According to the government, domestic drivers such as favourable agricultural prospects, the sustained effects of GST rationalisation, benign inflation, and the strong balance sheets of corporates and financial institutions- coupled with supportive monetary and financial conditions, are expected to continue bolstering the economic activity. Further, external factors such as services exports are projected to remain robust, while the swift conclusion of current trade and investment negotiations offers additional upside potential. Ongoing reforms are likely to further enable growth prospects. Present macro-economic situation presents a rare ‘goldilocks period’ of high growth and low inflation.   

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