India at fourth: A giant leap with unfinished business

From the editor’s desk

India’s climb to the fourth spot among the world’s largest economies, with a nominal GDP of $4.187 trillion, is more than just a milestone—it’s a powerful reflection of its longterm ambition, resilience, and untapped potential. Surpassing Japan, once Asia’s economic frontrunner, isn’t just symbolic; it marks a major shift in the global economic order. India is no longer a bystander in global decision-making—it’s stepping into the arena with influence.

This transformation has been over a decade in the making. In 2014, India was ranked tenth. The rise from tenth to fourth in just over a decade highlights the country’s accelerating economic pace. But behind the celebration lies a complex reality. Progress is evident, but so are the challenges that remain unresolved.

India’s growth has been driven by major structural reforms. The introduction of the Goods and Services Tax (GST) streamlined markets across states, while the Insolvency and Bankruptcy Code helped clean up corporate finances and encouraged responsible lending. Schemes like the production-linked incentive (PLI) program brought in investments, boosting manufacturing and industrial growth. These efforts laid the foundation for long-term stability, even if results were not immediate.

External factors also worked in India’s favour. As global companies looked beyond China to diversify their supply chains, India’s large labor pool and growing consumer base made it an attractive destination. Digital tools like Aadhaar, UPI, and mobile internet expanded financial access and helped businesses scale. Even during the pandemic, India demonstrated remarkable resilience and adaptability. Yet, there’s growing recognition that reaching the fourth position is only a step forward—not the finish line. Prime Minister Narendra Modi acknowledged the new pressure India faces to rise to third place. Germany is next, but the journey will demand even greater effort and deeper reforms.

Significant hurdles remain. India’s investment in research and development is less than 1% of its GDP, far too low for a country aiming to lead in technology and innovation. The talent is there, but the support ecosystem—venture funding, regulatory ease, and risk-taking culture—needs strengthening. Bureaucratic delays and regional disparities continue to limit potential.

Another pressing concern is workforce participation, especially among women. Despite rapid digital growth and a booming service sector, job creation hasn't kept pace with population growth. Many young people remain underemployed, especially in rural areas, often working informally without social protections. Growth must be inclusive or it risks leaving millions behind, breeding frustration instead of national pride.

Productivity also remains a weak link. While India’s economic growth is projected at 6.2% in 2025, productivity per worker lags behind global peers. This stems from outdated agricultural practices, insufficient vocational training, and unequal access to modern technology. Bridging the digital divide and upgrading skills are crucial for sustained efficiency.

India’s economic journey is also unfolding in a shifting geopolitical landscape. Western nations increasingly view India as a strategic counterbalance to China, offering partnerships and investments. But with this support come greater responsibilities. India is expected to step up on global issues—from climate change and international trade to regional security and governance. Whether it can take on these roles remains an open question.

Outpacing Japan economically is a meaningful achievement. Japan remains a tech-savvy, high-income nation, but its aging population and economic stagnation have slowed its pace. India, in contrast, has a youthful demographic advantage. But this can only become a strength if matched with strong health, education, and job opportunities. A large young population is an asset only when empowered.

Public expectations are rising too. Indians are proud of this achievement, but also demand better governance, quality infrastructure, healthcare, education, and smoother government services. Economic progress must be visible in daily life, not just in data.

India must also frame its journey not merely as a race up the rankings but as a mission to improve lives, reduce inequality, and address sustainability. As the fourth-largest economy, India’s environmental policies will affect the planet. Climate responsibility cannot be postponed.