India as the World’s Fourth-Largest Economy: Scale Achieved, Prosperity Awaited

bigger economy does not automatically translate into better living standards for citizens. While per capita income has nearly doubled over the past decade, its absolute level remains modest, limiting improvements in health, education and quality of life.

Jobs, informality and inclusion

The labour market lies at the heart of this challenge. Nearly 90% of India’s workforce is employed in the informal sector, characterised by low productivity, income insecurity and weak social protection. Female labour force participation, at around 26%, is far below global averages, constraining household incomes and overall growth potential.

India’s demographic profile adds urgency. With more than a quarter of its population aged between 10 and 26, the country stands at the cusp of a potential demographic dividend. But this dividend is conditional on the creation of sufficient, high-quality jobs. Without rapid expansion in manufacturing, modern services and skill-intensive sectors, the youth bulge could become a source of social and economic strain.

External vulnerabilities

India’s rise has also unfolded amid a volatile global environment. Trade tensions, including tariffs imposed by the United States over India’s Russian oil purchases, and the absence of a comprehensive trade agreement with Washington, have added uncertainty. Currency pressures reflect these vulnerabilities: the rupee weakened by nearly 5% in 2025, reminding policymakers that external stability cannot be taken for granted.

What the milestone truly means

India’s emergence as the world’s fourth-largest economy is a powerful symbol of scale, resilience and global relevance. It signals what is possible when sustained growth and reform align. But it is not an endpoint. The real test lies in converting size into broad-based prosperity.

That will require deeper structural transformation across manufacturing, agriculture and services, stronger state-level reforms, greater female workforce participation, and a relentless focus on productivity and job creation. Only then will India’s impressive rank in global GDP tables translate into meaningful improvements in everyday life.

India’s economic ascent shows how far the country has come. Whether it can turn that ascent into shared prosperity will determine how significant this milestone ultimately proves to be.