Economy: India to remain the world’s fifth-largest economy in FY27
Virendra Pandit
New Delhi: India will remain the world’s fifth-largest economy in the fiscal year 2026-27, V. Anantha Nageswaran, Chief Economic Advisor to the Government of India, said on Tuesday.
Dr. Nageswaran told a parliamentary panel that India will retain this position mainly on account of base-year revision and exchange rate, the media reported.
The panel, Parliamentary Standing Committee on Finance, tabled its report on Tuesday.
In his oral submission to the committee on March 2, he said: “Japan’s economy was estimated to be at USD 4.4 trillion by the end of December 2025. Hence, we will have a gap of at least USD 500 billion, compared to Japan. Therefore, becoming the fourth-largest economy in 2026- 2027 is not going to be easy. We will still be the fifth largest economy in 2026-2027.”
However, in 2027-2028, “we may have a chance to become the fourth-largest, as much will depend on the Yen exchange rate as to how we are able to overtake Japan,” he said.
According to Dr. Nageswaran, due to base year revision (from 2011-12 to 2022-23), India’s nominal GDP is now lower by approximately Rs. 12 lakh crores as of 2025-2026. “We initially expected Rs. 357.1 lakh crore as of March 2026. The new revisions may leave us with Rs. 345.4 lakh crore. This, divided by the average exchange rate for 2025-2026, places us at USD 3.9 trillion.
“We were at USD 3.9 trillion by March 2025, but due to the revision and the rupee’s exchange rate depreciation, we are still at USD 3.9 trillion,” he said, adding that last year it got revised downwards to USD 3.75 trillion. Therefore, we will be a USD 3.9 trillion economy as of March 2026,” he said.
On the issue of India overtaking Germany and becoming the third-largest economy, the CEA was cautious. “Given the current trends of India’s real GDP growth, which we expect to be at least 7 percent and possibly 10 to 11 percent in nominal terms, if capital flows recover and India’s macroeconomic stability is well recognised by investors, both direct and portfolio, it is plausible that by the end of the decade, we will be positioned to become the third-largest economy in dollar terms.”
