India’s Economic Triumph: How the NDA Powered the Rise to the Fourth Largest Economy

 

India: The Rise to the Fourth Largest Economy – Phases, Impact, and NDA Government Initiatives

In a historic milestone, India has surpassed Japan to become the world’s fourth-largest economy in 2025, with a GDP of approximately $4.187 trillion, as confirmed by the International Monetary Fund (IMF) and echoed by NITI Aayog CEO B.V.R. Subrahmanyam. This achievement marks a significant leap from its position as the fifth-largest economy in 2023, reflecting a decade of transformative growth under the leadership of the National Democratic Alliance (NDA) government. India’s ascent to this economic stature is not just a number—it’s a testament to strategic reforms, robust policymaking, and an ambitious vision to make India a global economic powerhouse. This article explores the phases of India’s economic rise, its impacts on the nation and the world, and the NDA government’s innovative initiatives that have fueled this remarkable journey.

Phases of India’s Economic Ascent

India’s journey to becoming the fourth-largest economy can be divided into distinct phases, each marked by pivotal reforms, structural shifts, and global integration. These phases highlight the nation’s transformation from a post-independence, socialist-leaning economy to a dynamic, market-driven global player.

Post-Independence to 1991: The Foundation Phase

Context: For much of its post-independence history, India followed a socialist model with state-led industrialization and import substitution policies. Per capita income grew at a modest 1% annually, and the economy remained relatively closed. The Nehru-Mahalanobis approach, emphasizing heavy industries, laid the groundwork for self-reliance but limited global integration.

Key Developments: The Green Revolution in agriculture and the establishment of institutions like the Indian Institutes of Technology (IITs) built human and economic capital, setting the stage for future growth. However, rigid regulations and the "Licence Raj" stifled private enterprise.

1991-2014: Liberalization and Growth Acceleration

Context: The 1991 economic reforms, triggered by a balance-of-payments crisis, marked a turning point. India opened its markets, reduced trade barriers, and embraced foreign investment. The private sector began to flourish, particularly in services and IT.

Key Developments: GDP growth accelerated, reaching 7.5% in the late 2000s. By 2014, India’s GDP was around $2 trillion, making it the tenth-largest economy. The services sector grew rapidly, contributing significantly to GDP, though concerns about jobless growth and persistent poverty remained.

2014-2025: The NDA-Led Transformation

Context: Since the NDA government, led by Prime Minister Narendra Modi, assumed power in 2014, India has undergone a phase of bold reforms aimed at boosting manufacturing, digitalization, and infrastructure. This period saw India leap from the tenth-largest economy in 2014 to the fourth-largest by 2025.

Key Developments: India’s GDP grew from $2 trillion in 2014 to $4.187 trillion in 2025, with a nominal growth rate of 9.9% in FY25. The economy grew by 6.2% in Q3 FY25, with projections of 7.6% growth in Q4 FY25, driven by strong domestic demand and capital expenditure. India overtook the UK in 2022 to become the fifth-largest economy and surpassed Japan in 2025, as per IMF data.

Impact of India’s Rise to the Fourth-Largest Economy

India’s emergence as the fourth-largest economy has far-reaching implications, both domestically and globally, reshaping its socioeconomic landscape and global influence.

Domestic Impacts

Economic Growth and Employment: Rising employment and increasing private consumption have bolstered GDP growth. Urban unemployment dropped from 14.3% in FY21/22 to 9% in FY24/25, with notable improvements for female workers. However, youth unemployment remains a challenge at 16.8%.

Poverty Reduction: India halved extreme poverty (below $2.15/day) between 2011 and 2019, with continued progress driven by inclusive growth initiatives. Programs like Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY), providing free food grains to over 800 million beneficiaries, have enhanced food security and economic stability.

Infrastructure Development: The NDA’s focus on infrastructure has transformed connectivity. National highway construction increased from 12 km/day in FY15 to 28 km/day in FY23, and electrified rail routes expanded from 22,224 km to 50,394 km. The number of airports doubled, and cargo traffic at major ports rose from 581 million tonnes to 784 million tonnes.

Global Investment Hub: Improved investor confidence has made India a top destination for foreign direct investment (FDI). In Q1 2022, India ranked fifth globally in FDI inflows, with foreign exchange reserves reaching an all-time high of $670.1 billion in August 2024.

Global Impacts

Geopolitical Influence: India’s economic rise, coupled with milestones like hosting the G20 in 2023 and the Chandrayaan-3 moon landing, has cemented its status as a global superpower. Its G20 presidency emphasized multilateralism, integrating the Global South into international discourse and launching initiatives like the Global Biofuel Alliance.

Trade and Exports: India’s exports reached $433.56 billion in FY25, with engineering goods, petroleum products, and electronics leading the charge. The country’s focus on import substitution and trade agreements with nations like the UAE and Argentina has boosted FDI and trade competitiveness.

Sustainability Leadership: India’s commitment to net-zero emissions by 2070 and initiatives like the Green Credit Initiative at COP28 position it as a leader in sustainable development. The projected addition of 100 GW of solar capacity by 2025 underscores its renewable energy ambitions.

NDA Government Initiatives Driving India’s Economic Rise

The NDA government’s visionary policies and reforms since 2014 have been instrumental in propelling India to the fourth-largest economy. These initiatives focus on manufacturing, digitalization, infrastructure, and inclusivity, aligning with the vision of a “Viksit Bharat” (Developed India) by 2047.

Make in India

Objective: Launched in 2014, this flagship program aims to position India as a global manufacturing hub.

Impact: India has become the second-largest mobile phone manufacturer globally, with smartphone exports exceeding $10 billion in FY22-23. It is also the fourth-largest automobile manufacturer, producing 4.4 million cars in 2021. The Production Linked Incentive (PLI) Scheme for sectors like pharmaceuticals and electronics has attracted significant investment, enhancing manufacturing capabilities.

Digital India

Objective: To transform India into a digitally empowered society and knowledge economy.

Impact: The Aadhaar biometric system, with 1.13 billion holders by 2017, has revolutionized digital identity and financial inclusion. The Unified Payments Interface (UPI) and Bharat QR have driven digital transactions, with 108 crore mobile phones in use by 2017. Over 177,144 km of optical fiber cable was laid by 2017, connecting 78,220 gram panchayats, boosting rural connectivity.

Infrastructure and Logistics

Key Initiatives: The Amrit Bharat Station Scheme, launched in 2023, aims to modernize 1,309 railway stations. The National Logistics Policy has reduced trade costs, enhancing India’s competitiveness in global value chains. The pace of national highway construction has more than doubled, and the aviation sector has seen significant growth.

Impact: These efforts have improved the ease of doing business (India ranked 77th in the 2018 Ease of Doing Business Index) and attracted industrial investment, with capital expenditure rising to 28% of total central government spending (excluding interest payments) in FY24.

Social and Economic Inclusion

Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY): Launched in 2023, this scheme provides free food grains to over 800 million beneficiaries, ensuring food security and supporting rural consumption.

Stand-Up India and Startup India: These programs promote entrepreneurship, particularly among women, Scheduled Castes (SC), and Scheduled Tribes (ST). By 2017, Rs. 5,237.29 crore was sanctioned for 25,435 accounts under Stand-Up India, and over 713 startups were recognized under Startup India, fostering innovation and job creation.

Mission Indradhanush: This health initiative, launched in 2014, increased immunization coverage to 90% by 2020, strengthening human capital by reducing maternal and neonatal mortality.

Sustainability and Green Initiatives

Draft Carbon Credit Trading Scheme (2023): This scheme incentivizes low-carbon development, aligning with India’s net-zero goal by 2070.

PM-DevINE: With a Rs. 1,500 crore outlay, this initiative focuses on sustainable development in the Northeast, enhancing regional economic growth.

Financial and Governance Reforms

Goods and Services Tax (GST): Implemented in 2017, GST streamlined taxation, increasing compliance and government revenue.

Expenditure Reform Commission: Established to prioritize and rationalize government spending, ensuring efficient use of taxpayer money.

Aatmanirbhar Bharat and Foreign Trade Policy (2023): These policies promote self-reliance and global trade integration, supporting India’s $1 trillion merchandise export target by 2030.

Challenges and the Road Ahead

Despite its achievements, India faces challenges in sustaining this growth trajectory. High youth unemployment, water scarcity (with only 4% of global water resources for 18% of the world’s population), and the need for greater workforce skilling (average schooling of 7 years in 2015) remain hurdles. The World Bank emphasizes the need for public sector reform, agricultural development, and labor regulation changes to maintain momentum.

Looking ahead, India is projected to become the third-largest economy by 2027-2030, surpassing Germany, with a GDP of $5 trillion by 2027 and $6.8 trillion by 2030, according to IMF forecasts. To achieve this, the NDA government must continue its focus on reducing trade barriers, enhancing global value chain integration, and investing in education and skills development to capitalize on India’s demographic dividend.

    India’s rise to the fourth-largest economy is a story of resilience, reform, and ambition. From the liberalization of 1991 to the NDA’s transformative initiatives since 2014, India has navigated complex challenges to emerge as a global economic titan. The impacts—reduced poverty, enhanced infrastructure, and growing geopolitical influence—underscore the significance of this milestone. The NDA’s policies, from Make in India to Digital India, have laid a strong foundation for sustained growth, positioning India to achieve its vision of becoming a $5 trillion economy by 2027 and a high-middle-income nation by 2047. As India continues its ascent, its blend of innovation, inclusivity, and global engagement will shape not only its future but also the global economic landscape.