India To Overtake Japan To Become 3rd Largest Economy In 2025: IHS Markit

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In the world’s largest economy rankings, India continues to grow rapidly and it is all set to overtake the United Kingdom this year to become the world’s fifth biggest economy. It is said that by the year 2025, India could surpass Japan to be the third largest economy. In fact, the finance ministry has published an economic road map to 2025 in its largest annual Economic Survey.

Since the BJP government led by Prime Minister Narendra Modi took the second term of office in May 2019, the key goal is to transform India from a USD 3 trillion economy in 2019 to a USD 5 trillion economy by 2025, lifting India into the ranks of the world’s upper-middle-income countries.

The fastest growing economy

IHS Markit said in a report that India will overtake the UK to become the world’s fifth largest economy in 2019 and forecasts that Indian GDP will reach USD 5.9 trillion by 2025, surpassing Japanese GDP to make India the world’s third-largest economy. As the market consumption continues to expand at a rapid pace, India will also play an increasingly important role as one of the Asia-Pacific region’s major economic growth engines, which will help other Asian regional drive trade and investment flows.

But this could only happen when India’s new economic roadmap highlights the importance of creating a virtuous cycle of investment, savings, and exports in order to sustain rapid economic growth over the next five years.


The role of investment is seen as a critical enabler for innovation, rapid productivity growth, and new technology, helping to boost the growth of jobs. Moreover, the roadmap explained in the latest Economic Survey highlights the importance of creating a favorable ecosystem for private investment, particularly in the new economy.

Growth in consumption of products

The size of the Indian consumer market is believed to increase from $1.9 trillion in 2019 to $3.6 trillion by 2025. Although the report suggests, despite notable achievements in new infrastructure construction during PM Modi’s first term, rapid infrastructure development in key sectors such as transport and power infrastructure remain important priorities.

In fact, India was ranked 77 out of 190 countries that are included on the World Bank’s Ease of Doing Business Index for 2019. India is still far behind from some emerging markets such as Turkey (43rd), China (46th) and Mexico (54th) on this ranking.

Growing Population

The countries growing population between 2015 and 2050 is projected at around 350 million persons, creating significant fiscal challenges for the government in order to deliver ample physical infrastructures such as electricity, sewage disposal, affordable housing, and transport vehicles.

In the meantime, it is also noted that over the next 2 decades, the countries population growth rate will also slow rapidly, resulting in gradual aging of the population, bringing additional budgetary challenges relating to healthcare, pensions and social welfare for senior citizens.

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