NEW DELHI: India’s ambition of becoming a $5-trillion economy will take longer than earlier thought, according to the latest projections by the International Monetary Fund (IMF). The delay has been attributed to slower nominal GDP growth and sharper depreciation of the rupee.
India initially aimed to achieve the $5-trillion milestone by 2024-25, before revising the target to 2027-28. However, the IMF now estimates the economy to cross the $4-trillion mark only in FY26 and reach $4.96 trillion in FY28, falling short of the goal.
India is projected to hit $5.46 trillion by FY29 and cross $6 trillion in 2030.
The rupee’s weakness has particularly weighed on dollar-denominated GDP figures. The currency has depreciated 4.26% so far this year. Lower inflation has also slowed growth in nominal GDP, calculated at current market prices.
Subhash Chandra Garg, former finance and economic affairs secretary, warned that missing the target timeline could indicate the “Indian economy becoming stuck in the lower middle-income trap.”
Despite this, India is still expected to overtake Japan this year to emerge as the world’s fourth-largest economy.
IMF projections suggest India could close FY26 with a GDP size of $4.12 trillion. India’s real GDP is expected to grow 6.6% in 2025-26. The IMF noted that reforms like the goods and services tax (GST) will help cushion the economy from global trade shocks, including the recent 50% tariffs imposed by the US.
“India’s economy has continued to perform well. Following economic growth of 6.5% in FY 2024-25, real GDP expanded by 7.8% in the first quarter of FY 2025-26,” the IMF said after completing its annual Article IV consultation for India.