How Indian economy slid to 6th-largest in the world, with Japan, UK overtaking

Weather ePaper Today’s Paper Journalism of Courage Home ePaper Politics Explained Opinion India Business Premium Cities UPSC Entertainment Sports World Lifestyle Tech Subscribe Sign In TrendingUPSC OfferIPL 2026US NewsPuzzles & GamesLegal NewsFresh TakeHealthResearch🎙️ Podcast Advertisement function checkAndLoadWindowSizeScript() { if (window.jQuery) { // jQuery is loaded, include your script jQuery(document).ready(function($) { // Your existing script for checking window width if (window.innerWidth) var page_w = window.innerWidth; else if (document.all) var page_w = document.body.clientWidth; if (page_w > 1024) { $(".add-left, .add-right").show(); } else { $(".add-left, .add-right").hide(); } }); } else { // jQuery is not loaded, check again after 0.2 seconds setTimeout(checkAndLoadWindowSizeScript, 200); } } // Initial call to the function checkAndLoadWindowSizeScript(); NewsExplainedExplained EconomicsHow Indian economy slid to 6th-largest in the world, with Japan, UK overtaking How Indian economy slid to 6th-largest in the world, with Japan, UK overtaking India 6th largest economy: When the IMF calculates its rankings in US dollar terms, it uses two data points: a country’s GDP in the local currency and the exchange rate with dollar. On both these counts, India has suffered significant setbacks in the last 12 months. Written by: Udit Misra4 min readNew DelhiUpdated: Apr 17, 2026 11:50 AM IST India Economy Ranking 2026: Factory workers stage a protest demanding a hike in wages, in Noida, Gautam Buddh Nagar district, Uttar Pradesh, Monday, April 13, 2026. (Express Photo) Make us preferred source on Google Whatsapp twitter Facebook Reddit PRINT India 6th Largest Economy: According to the latest World Economic Outlook (WEO) released by the International Monetary Fund (IMF), India is no longer the 4th largest economy in the world. According to the latest WEO, in 2026 India’s gross domestic product — the total value of all goods and services produced inside the country — will be around $4.15 trillion (up from $3.92 trillion in 2025) while the UK’s GDP will be $4.27 trillion (up from $4 trillion in 2025) and Japan’s GDP would actually fall from $4.48 trillion in 2025 to $4.38 trillion in 2026. In September 2022, when India overtook the UK to become the 5th-largest economy, the shift was celebrated with distinct joy given the past of British colonial rule in India. At that time it was widely expected that, given India’s growth trajectory as well as the long-standing economic stagnation in Germany and Japan, India would overtake Germany (then the 4th-largest) and Japan (then the 3rd-largest) by 2029. As things turned out, Germany overtook Japan before India could overtake Germany. In May last year, Niti Aayog CEO BVR Subrahmanyam declared that India had overtaken Japan to become the fourth-largest economy in the world. But far from becoming the 3rd-largest, India has slid down to the 6th rank. When the IMF calculates its rankings in US dollar terms, it uses two data points: One, a country’s GDP in the local currency and two, the exchange rate with dollar to arrive at a dollar figure. On both these counts, India has suffered significant setbacks in the last twelve months. Firstly, India updated its GDP estimates with a new base in February-end. The new GDP estimates essentially showed that the previous GDP series was overestimating India’s GDP. In rupee terms, India’s GDP for 2025-26 was rolled back from Rs 357 trillion (or lakh crore) to Rs 345 trillion. The second thing that changed is the rupee-dollar exchange rate. The Indian rupee has rapidly lost its value relative to the US dollar over the past year. What’s worse, this fall in the exchange rate has happened when the dollar itself has lost value against other currencies such as the British pound and the Japanese yen. That, in turn, means when the IMF calculates GDP in dollar terms, the gap between Indian GDP and that of the UK’s or Japan’s expands even more. India’s GDP for 2025, for instance, fell from being $4.1 trillion (according to the earlier GDP estimates) to $3.9 trillion according to the new ones. That in itself allowed Japan to overtake India; and this has happened despite the fact that Japan’s GDP in 2026 ($4.38 trillion) is lower than what it was in 2022 ($4.45 trillion). In 2026, for similar reasons, the UK is expected to overtake India. Will India recover? If so, when? There is a big gap between the top two economies and the rest of the world. The US GDP in 2026 is expected to be $32.38 trillion while China, the second-largest economy, is pegged at $20.85. By itself, the US economy is bigger than all the economies in the European continent put together while China on its own is bigger than the GDP of all the countries that are part of the European Union. But after the top two, the next four economies are very closely bunched together around the $4 trillion mark. TABLE 1 alongside gives the data for four countries that have been keenly competing for being the best amongst the rest. As such, according to the IMF’s projections, notwithstanding the setback in 2026, India will retake the position of the 4th-largest economy in 2027 although overtaking Germany to become the third-largest economy is expected to happen in 2031. Udit Misra is Senior Associate Editor at The Indian Express. Misra has reported on the Indian economy and policy landscape for the past two decades. He holds a Master’s degree in Economics from the Delhi School of Economics and is a Chevening South Asia Journalism Fellow from the University of Westminster. Misra is known for explanatory journalism and is a trusted voice among readers not just for simplifying complex economic concepts but also making sense of economic news both in India and abroad. Professional Focus He writes three regular columns for the publication. ExplainSpeaking: A weekly explanatory column that answers the most important questions surrounding the economic and policy developments. GDP (Graphs, Data, Perspectives): Another weekly column that uses interesting charts and data to provide perspective on an issue dominating the news during the week. Book, Line & Thinker: A fortnightly column that for reviewing books, both new and old. Recent Notable Articles (Late 2025) His recent work focuses heavily on the weakening Indian Rupee, the global impact of U.S. economic policy under Donald Trump, and long-term domestic growth projections: Currency and Macroeconomics: "GDP: Anatomy of rupee weakness against the dollar" (Dec 19, 2025) — Investigating why the Rupee remains weak despite India's status as a fast-growing economy. "GDP: Amid the rupee's fall, how investors are shunning the Indian economy" (Dec 5, 2025). "Nobel Prize in Economic Sciences 2025: How the winners explained economic growth" (Oct 13, 2025). Global Geopolitics and Trade: "Has the US already lost to China? Trump's policies and the shifting global order" (Dec 8, 2025). "The Great Sanctions Hack: Why economic sanctions don't work the way we expect" (Nov 23, 2025) — Based on former RBI Governor Urjit Patel's new book. "ExplainSpeaking: How Trump's tariffs have run into an affordability crisis" (Nov 20, 2025). Domestic Policy and Data: "GDP: New labour codes and opportunity for India's weakest states" (Nov 28, 2025). "ExplainSpeaking | Piyush Goyal says India will be a $30 trillion economy in 25 years: Decoding the projections" (Oct 30, 2025) — A critical look at the feasibility of high-growth targets. "GDP: Examining latest GST collections, and where different states stand" (Nov 7, 2025). International Economic Comparisons: "GDP: What ails Germany, world's third-largest economy, and how it could grow" (Nov 14, 2025). "On the loss of Europe's competitive edge" (Oct 17, 2025). Signature Style Udit Misra is known his calm, data-driven, explanation-first economics journalism. He avoids ideological posturing, and writes with the aim of raising the standard of public discourse by providing readers with clarity and understanding of the ground realities. You can follow him on X (formerly Twitter) at @ieuditmisra           ... Read More