India’s rise to 4th largest economy: Does GDP growth alone show the whole picture?

IMF projects India to surpass Japan in GDP, but true prosperity lies in social, health, and education indicators.

The International Monetary Fund (IMF) recently projected that India will edge past Japan to become the world’s fourth largest economy in 2025. While this marks a notable milestone, comparisons based solely on absolute Gross Domestic Product (GDP) offer limited insight into the lived realities of people.

Absolute GDP figures are useful for understanding the size of an economy, but they do not capture how wealth is distributed, how developed a country is, or how its citizens are faring. They mask disparities in population size, cost of living, and income inequality. A country may have a large economy overall, but that doesn’t necessarily translate into prosperity or improved living standards for its people.

Chart 1A shows the absolute Gross Domestic Product (in $ billion) of select countries in 2000 and 2025

For instance, as Chart 1A shows, India’s absolute GDP (in $ billion) is estimated to have risen from $468.4 billion in 2000 to $4,187 billion in 2025, narrowly surpassing Japan’s figures in the process. However, as Chart 1B shows, India’s GDP per capita is 12 times lower than Japan’s in 2025.

Chart 1B shows the GDP per capita (in US$) of select countries in 2000 and 2023

To drive home the point, let us add Poland to the comparison — a country often cited for its quick transition from a lower middle-income to a high-income economy. As seen in Chart 1A, Poland’s total GDP is around four times smaller than India’s, but as Chart 1B shows, its GDP per capita is nearly nine times higher.

While economic growth is an important marker of a country’s progress, it is equally vital to assess the strides made in social, educational, health, and democratic indicators, as advancements in these areas offer a more meaningful measure of true prosperity. The following paragraphs present indicators related to these dimensions, comparing India, Poland, and Japan across two time periods — the latest available data and figures from roughly two decades ago.