Relevance: GS-III (Indian Economy – Growth & Development) | Source: The Hindu; International Monetary Fund, Government of India

What is the News?

India has surpassed Japan to become the world’s fourth-largest economy, with a nominal Gross Domestic Product of about 4.18 trillion United States dollars. India is projected to overtake Germany by 2030.

Key Facts

• India’s rank by nominal Gross Domestic Product: Fourth globally
• Current nominal Gross Domestic Product: ~4.18 trillion United States dollars
• India remains the fastest-growing major economy

Growth drivers include:

• Strong domestic consumption
• Public infrastructure investment
• Stable financial system and credit growth

Why it Matters

• Signals a shift of global economic weight towards the Global South
• Enhances India’s influence in global economic governance
• Provides fiscal space for development, welfare, and infrastructure
• However, per capita income remains low, highlighting the need for inclusive growth

UPSC Prelims Value Box

Nominal Gross Domestic Product measures the total value of goods and services produced in an economy at current market prices.

Institution : International Monetary Fund publishes cross-country Gross Domestic Product rankings.

Question

Q. India recently became the world’s fourth-largest economy. This ranking is based on which of the following measures?

A. Purchasing Power Parity Gross Domestic Product
B. Nominal Gross Domestic Product
C. Gross National Income
D. Real Gross Domestic Product