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India’s Rise to a $4 Tn. Economy is a Milestone, Not the Destination 

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India’s Rise to a $4 Tn. Economy is a Milestone, Not the Destination 

India has officially overtaken Japan to become the world’s fourth-largest economy, with a nominal GDP of $4.187 trillion, according to the International Monetary Fund’s latest World Economic Outlook. On the surface, this is a moment of celebration—an affirmation of India’s global economic relevance and a testament to decades of reform and resilience. Yet, behind the euphoria lies a more complex reality: India’s rise in GDP rankings masks deep-rooted disparities that challenge the narrative of comprehensive progress. 

While India’s overall GDP now surpasses that of Japan, its per capita income—around $2,400 in 2025—is comparable to where Japan stood in the 1950s. It trails not only developed nations but even emerging economies like Kenya, Morocco, and Côte d’Ivoire. Ranked 144th globally in per capita GDP, India’s economic rise has yet to translate into tangible benefits for the average citizen. 

The disparity between national income and individual prosperity signals a broader issue: the country’s growth story is uneven and exclusionary. According to estimates, the top 10% of earners in India control nearly 57% of the total income, while the bottom 50% manage with just 15%. This chasm is not just economic; it is social, regional, and generational. 

For instance, states like Maharashtra and Karnataka have emerged as engines of growth, boasting higher industrial output and service sector strength. In contrast, populous states like Uttar Pradesh and Bihar continue to lag well below the national average in key indicators like education, health, and per capita income. Despite Uttar Pradesh being the fifth-largest state economy, its per capita GDP is lower than nearly three-fifths of African nations. 

Senior Congress leader Pawan Khera has flagged this issue too while talking to IANS, saying, “You can play with the numbers. But unemployment has breached the 45-year record. There is a huge disparity between the rich and the poor. The middle class is fighting it out to pay EMIs. MSME and the unorganised economy have been shattered. Just by counting the wealth of five to six rich people, finding the numbers is incorrect.” 

This imbalance extends to employment. Nearly 42% of India’s workforce remains dependent on agriculture, a sector that contributes merely 16% to the national GDP. Meanwhile, high-productivity sectors like manufacturing and technology are not absorbing labor at a pace necessary to rebalance the economy. Ambitious initiatives such as Make in India and Smart Cities Mission promised structural transformation but have delivered limited visible outcomes. The share of manufacturing in GDP has stagnated or declined, and there is little consensus on what constitutes a “smart city,” let alone evidence of one. 

These concerns reflect a larger truth: GDP growth, while necessary, is not sufficient. The focus on nominal economic rankings often obscures more pressing priorities—improving quality of life, reducing inequality, and ensuring inclusive access to resources and opportunities. 

Business leaders and economists alike have urged India to move beyond statistical milestones. Anand Mahindra, Chairman of the Mahindra Group, rightly emphasized that the next frontier for India should be improving per capita GDP and not just overtaking Germany or China on total output. That will require sustained reforms in governance, education, healthcare, infrastructure, and capital access. 

To truly emulate the trajectory of nations like Japan in its prime, India needs to invest in its people. Japan’s post-war economic miracle wasn’t driven solely by output—it was underpinned by nation-building: robust infrastructure, quality education, industrial policy, and a commitment to equity and social stability. 

India stands at a similar inflection point. The demographic dividend—often cited as a key advantage—could easily become a liability without focused investment in skills, especially in STEM fields, and job creation across diverse sectors. Urban infrastructure must be made liveable, healthcare systems resilient, and education accessible and future-ready. 

If India maintains its current growth rate of around 6.2–6.5%, as projected by the IMF, it will remain a formidable economic force. But to unlock its full potential, a sustained 8% growth trajectory is necessary, akin to what China and Japan achieved during their transformative years. This will also require raising the capital formation rate from the current 24% to the desired 32%. 

Ultimately, the celebration of India’s rise in GDP rankings should be tempered with reflection. Economic headlines can offer a morale boost, but they should not distract from the core mission: ensuring that growth is inclusive, equitable, and transformative at the grassroots level. 

India’s path from the fourth-largest economy to a truly developed nation lies not just in growing bigger, but in growing better. The next chapter must be about people, not just numbers. Because in the end, even having a $10 trillion economy matters little if it doesn’t uplift those living at the bottom of the economic and social pyramid.