With Q1 GDP growth of 7.8%, India projected to become world’s third largest economy by 2030

With a GDP growth of 7.8 per cent in the first quarter of the current financial year (April-June 2025-26), India, currently the world’s fourth-largest economy, hopes to become the third-largest by 2030, with a projected GDP of $7.3 trillion. 

The Narendra Modi government expects to sustain the growth momentum through decesive intervention and active global engagement.

India’s Gross Domestic Product (GDP) in real terms, ie, after adjusting for inflationary effects, is estimated to reached Rs47.89 lakh crore at the end of the first quarter of the current financial year (April-June 2025-26) from Rs44.42 lakh crore at the end of Q1 of 2024-25, recording an robust 7.8 per cent year-on-year growth. 

The country’s GDP, at constant prices, had grown by 6.5 per cent in Q1 of 2024-25.

India’s economy was boosted by a strong tertiary sector that recorded an impressive 9.3 per cent growth in Q1 of FY2025-26, against the 6.8 per cent growth recorded in Q1 of FY2024-25.

The primary or allied sector, comprising agriculture, livestock, forestry and fishing and mining and quarrying grew by 3.7 per cent in Q1 of the current fiscal, against the 1.5 per cent growth in the corresponding quarter of the previous fiscal.

The secondary sector, comprising manufacturing, electricity, gas, water supply and other utility services and construction recorded strong performance, with manufacturing growing at 7.7 per cent and construction at 7.6 per cent.

Much of the growth can be attributed to rising domestic demand and consumption combined with the sharp pick-up in services sector growth which hit a high of 9.3 per cent in April-June 2025-26.

With easing inflation, higher employment, and buoyant consumer sentiment, private consumption is expected to further drive GDP growth in the coming months.

Gross Value Added (GVA), which is net of direct and indirect taxes and subsidies and is a better reflection of economic activity, recorded a growth of 7.6 per cent in April-June 2025. 

Government capital expenditure (CAPEX) stood at Rs10,52 lakh crore in 2024-25, surpassing revised estimates. This is expected to expand further in the current fiscal. 

Notably, the ratio of capital expenditure to revenue expenditure, has remained higher than 0.27 for the past three years while the government’s capital expenditure is expected tp pick up from 8.2 per cent in July-November 2024.

Real Private Final Consumption Expenditure (PFCE), which is the total value of goods and services purchased by resident households and non-profit institutions, adjusted for inflation has grown by 7 per cent in Q1 of FY2025-26 against 8.3 per cent in Q1 of FY 2024-26 while Government Final Consumption Expenditure (GFCE) expanded by 9.7 per cent during the quarter against the 4 per cent growth recorded in the year-ago quarter.

The Indian economy is projected to reach a GDP of Rs4,26,45,000 crore ($5 trillion) by 2027 and is on course to surpass Germany by 2028. By 2030, India is expected to become the world’s third-largest economy with a projected GDP of $7.3 trillion.