India is expected to remain the world’s fifth largest
economy in FY 2026–27, with overtaking Japan prov
ing challenging in the near term, Chief Economic Advisor V
Anantha Nageswaran told a Parliamentary panel.
According to a report tabled by the Standing Committee on
Finance, Nageswaran noted that Japan’s economy is
projected at around USD 4.4 trillion by end-2025, leaving a
gap of nearly USD 500 billion with India,
He said factors such as base-year revision and exchange
rate movements would influence India’s global ranking,
making it difficult to become the fourth largest economy in
FY27. However, he indicated that India may have a chance
to overtake Japan in FY 2027–28, depending largely on yen
exchange rate trends. Nageswaran highlighted that the
revision of the GDP base year from 2011–12 to 2022–23 has
lowered India’s nominal GDP estimates by around Rs 12
lakh crore for FY26. The revised estimate stands at about
Rs 345.4 lakh crore, translating to approximately USD 3.9
trillion at current exchange rates. He added that despite
economic growth, currency depreciation and statistical
revisions have kept India’s GDP size broadly unchanged at
around USD 3.9 trillion compared to the previous year,
while FY25 estimates have also been revised down to USD
3.75 trillion. On the prospect of India becoming the third
largest economy globally, he said it remains achievable by
the end of the decade, subject to sustained real GDP growth
of around 7 percent and nominal growth of 10–11 percent.
He emphasised that improved capital inflows and
continued macroeconomic stability would be key factors in
enabling India to surpass major economies such as
Germany in the coming years.