India on Track to Surpass Japan as the World's Fourth-Largest Economy

According to recent data from the International Monetary Fund (IMF), India is poised to surpass Japan and become the fourth-largest economy in the world. Some attribute this achievement to central government policies such as ‘Digital India’, ‘Make in India’, and a strong focus on infrastructure. These initiatives, they say, have given India a new global identity and raised hopes for farmers, laborers, and the middle class.

On the other hand, critics view this growth as superficial. They argue that unless every citizen has access to employment, education, and healthcare, India cannot truly be compared to developed nations.

These figures raise several questions, such as:

• Which government policies under the Modi administration played the most crucial role in India reaching this point?
• Why is unemployment still high despite rapid economic growth?
• Who is actually benefitting from this development?
• What role has the digital revolution played in this transformation?
• If everything is improving, why is the gap between the rich and the poor widening?
• And most importantly, how has this economic progress actually impacted the lives of ordinary citizens?

B.V.R. Subrahmanyam, CEO of NITI Aayog, made a statement claiming that India has overtaken Japan to become the world’s fourth-largest economy. While some economists applauded the announcement, others questioned its validity. Every time such figures are released, ordinary people wonder whether this economic progress has affected their daily lives.

For example:
“If one family earns ₹5 lakh from one person, and another family earns ₹5 lakh from four people combined, it's incorrect to say both are equal based solely on income. The expenditure in both cases is vastly different.”
Similarly, comparing countries purely based on GDP numbers can be misleading. Countries like Japan and Germany have much smaller populations than India.

If economic activity increases, it's expected that all sections of society should benefit. But there are two crucial aspects that cannot be ignored:

1. Which sector is experiencing growth?
   • If it's the construction sector, laborers might directly benefit.
   • If it's the financial sector, the benefits will likely go to a limited, already privileged section of society.

It’s important to understand which sectors the country is investing in and how those sectors are connected to the broader economy.

When we talk about GDP growth rates, it should be viewed sector-wise — how much growth occurred in agriculture, how much in manufacturing, etc. This helps us determine whether the growth is inclusive or limited to specific areas.

Why Are Government Data Questioned?

Amid the claims of becoming the fourth-largest economy, some believe India is progressing economically in the right direction despite its vast population. Others point out that the GDP claim might be premature.

Government-released economic data often comes under scrutiny. Gautam Chikermane, Vice President at Observer Research Foundation, believes only governments have the resources to collect such large-scale data, and we must trust them.

He said,
“There is only one data point worldwide, and governments gather that data. No one else has the capacity. If you say the government is wrong, the World Bank is wrong, the IMF is wrong, the Asian Development Bank is wrong, the United Nations is wrong — then who is right? Tell me, and I’m ready to debate those numbers.”

He gave an example:
If a country has two people — one earns ₹1 lakh and the other earns ₹4 lakh — the total GDP is ₹5 lakh, and average income becomes ₹2.5 lakh. But this doesn’t reflect the true economic condition. If the government transfers ₹2 lakh from the richer to the poorer person, GDP remains the same, but inequality reduces.

“We need to focus on income distribution. Taking from the rich and giving to the poor can significantly reduce inequality.”
So, per capita income should be the benchmark for comparison, not total GDP.

Unemployment and Government Jobs

Unemployment in India is a serious and complex issue, especially for youth, women, and the educated population. Some experts say many waste time waiting for government jobs, while others argue that there simply aren't enough job opportunities.

During elections, opposition parties often use unemployment as a key issue to target the ruling government.

Economist Ritika Khera said,
“Many people cannot sit completely idle, so unemployment rates don’t appear very high. Those who don’t find good jobs start doing something — like opening a bicycle repair shop — just to survive.”

About the gig economy, she said:
“Gig work doesn't generate much income. Occasionally, someone may earn a lot, but that’s rare. On average, the income is limited.”

On government jobs, she noted:
“It’s not that all government jobs pay very well, but they offer job security and benefits, which attract people.”
She added that if the private sector begins to offer similar security and stability, people would be willing to shift.

She emphasized that for a large section of workers, wages are too low, and there’s no job security — they can be dismissed anytime, which makes people avoid such sectors.

Chikermane of ORF offers a different view:
He argues unemployment in India is not as high as claimed.
“The issue is that for most youth, a job means a government job. If that mindset doesn’t change, job numbers will always appear limited.”

He further said,
“If a young person spends ages 20–35 preparing only for government jobs and then claims they are unemployed, neither you, nor I, nor the government can help.”

How Can the Situation Improve?

• “If manufacturing increases, workers will get employment. The most crucial transformation — from agriculture to manufacturing and then to the service sector — is only possible through such growth.”
• “Our agricultural sector is highly unproductive. We need to increase its productivity tenfold, and that’s only possible through mechanization, not just labor.”
• “This requires reforms that encourage the private sector to invest in manufacturing.”

This balanced view highlights both the achievements and the concerns surrounding India’s rise as a global economic power. While macroeconomic numbers paint a promising picture, the real impact lies in inclusivity, sectoral balance, job creation, and income equity.