India’s journey to third largest economy

India is set to become the world's third-largest economy by 2028-2030, driven by robust GDP growth, strong domestic demand, and transformative policy reforms like the Goods and Services Tax (GST) and the PM Viksit Bharat Rozgar Yojana.

Key factors supporting this growth include rapid digitisation, aggressive infrastructure development, and empowered MSMEs, all contributing to India's position as the world's fastest-growing major economy.

Currently the world’s fourth-largest economy, India is on track to become the third-largest by 2030 with a projected $7.3 trillion GDP.

This momentum is powered by decisive governance, visionary reforms, and active global engagement. Notably, growth is accelerating, with real GDP expected to rise by 7.8% in Q1 FY 2025-26, up from 6.5% a year earlier.

The ascent is powered by strong domestic demand and transformative policy reforms, making India a prime destination for global capital. With easing inflation, higher employment, and buoyant consumer sentiment, private consumption is expected to further drive GDP growth in the coming months.

India’s GDP overtook that of the UK in 2021 (FY2022 for India), making it the fifth-largest economy. Further, the Indian economy is projected to overtake both Japan and Germany in 2027 (FY28 for India) to become the 3rd largest economy. At this point, the US economy would still be nearly six times as large as the Indian economy

India is expected to overtake China in 2030. This share is projected to remain not only higher than that of China in the remaining decades of this century, but the gap is also estimated to increase.

Further, India would maintain the lowest old-age dependency ratio throughout the remaining decades of the century relative to the peer countries4, enabling higher saving and investment rates.

It is also important to look at economic strategies that would ensure sustaining a high level of growth over the medium term and beyond.

Strategies to absorb oil price shocks and contain government borrowing at prudent levels would increase India’s capacity to minimize the adverse economic impacts of externally rooted shocks.

In the forthcoming decades, India would benefit by capitalizing on its AI/Gen AI potential to take advantage of its unfolding demographic trends. Alongside, government’s debt stabilization efforts would increase India’s capacity to minimize the adverse economic impacts of global economic upheavals.

From a policy perspective, India must prioritize investment in productivity-enhancing technologies pertaining to AI/Gen AI and education and skilling facilities for its large and growing working age population.

India’s aspiration to achieve high income status by 2047 will need to be realized through a climate-resilient growth process that delivers broad-based gains to the bottom half of the population.

Growth-oriented reforms will need to be accompanied by an expansion in good jobs that keeps pace with the number of labor market entrants. At the same time, gaps in economic participation will need to be addressed, including by bringing more women into the workforce.

The World Bank is partnering with the government in this effort by helping strengthen policies, institutions, and investments to create a better future for the country and its people through green, resilient, and inclusive development.