India GDP Ranking Falls from 4th to 6th: IMF Explains the Reasons Behind the Drop Despite Strong Growth
India falling in GDP rankings from fourth to sixth may sound like a setback at first, but in reality, the situation is more nuanced. According to the International Monetary Fund (IMF), India’s economy continues to grow at one of the fastest rates globally. The shift in rankings is more about how the certain figures are calculated rather than just actual economic growth.
In 2025-26, India’s GDP is estimated to reach $3.92 trillion, slightly behind the United Kingdom at $4 trillion and Japan at $4.44 trillion. However, just a year earlier, India had briefly overtaken the UK, reinforcing its rising economic stature and showing its true potential. So what changed? The answer lies not in slowing growth, but in technical adjustments that influence how global economies are measured.
The decline comes despite India recording around 9 per cent nominal growth in rupee terms. The difference lies in how GDP is ranked globally.
The IMF ranks countries’ GDP in dollar terms. In other words, GDP in local currency must be converted into US dollars using exchange rates to ensure global comparability. A second key factor has been the revision in the GDP base year and methodology, carried out in February this year, which led to a downward adjustment in nominal output.
The base year was updated from 2011-12 to 2022-23, and the revised series shows a smaller economy than previously estimated. Government data indicates that nominal GDP for FY26 declined from Rs 357 trillion in the old series to Rs 345.5 trillion in the new series.
IMF estimates also reflect this shift, with India’s GDP projections revised downward across years. The 2027 estimate has been cut to $4.58 trillion from $4.96 trillion in the earlier October update.
Exchange rate movements against the US dollar have also played a role in these revisions. Over this period, the rupee depreciated from 84.6 per US dollar in 2024 to 88.5 in 2025. More recently, it has faced pressure, trading in the Rs 94-95 per dollar range before stabilising at around Rs 93.39. This volatility has been driven by high global oil prices and strong dollar demand amid geopolitical tension in West Asia.
Other factors include the outflow of foreign capital and rising hedging costs, which have also prompted intervention by the Reserve Bank of India (RBI) to manage rupee volatility and curb depreciation pressure in the coming years.
Overall, the statistics ministry revised nominal GDP growth downward by 2.8 to 3.8 per cent for the period between 2022-23 and 2023-24, which has affected the comparative size of the economy.
In 2025-26, India’s GDP is estimated to reach $3.92 trillion, slightly behind the United Kingdom at $4 trillion and Japan at $4.44 trillion. However, just a year earlier, India had briefly overtaken the UK, reinforcing its rising economic stature and showing its true potential. So what changed? The answer lies not in slowing growth, but in technical adjustments that influence how global economies are measured.
Reasons
The decline comes despite India recording around 9 per cent nominal growth in rupee terms. The difference lies in how GDP is ranked globally.
The IMF ranks countries’ GDP in dollar terms. In other words, GDP in local currency must be converted into US dollars using exchange rates to ensure global comparability. A second key factor has been the revision in the GDP base year and methodology, carried out in February this year, which led to a downward adjustment in nominal output.
The base year was updated from 2011-12 to 2022-23, and the revised series shows a smaller economy than previously estimated. Government data indicates that nominal GDP for FY26 declined from Rs 357 trillion in the old series to Rs 345.5 trillion in the new series.
IMF estimates also reflect this shift, with India’s GDP projections revised downward across years. The 2027 estimate has been cut to $4.58 trillion from $4.96 trillion in the earlier October update.
Exchange rate movements against the US dollar have also played a role in these revisions. Over this period, the rupee depreciated from 84.6 per US dollar in 2024 to 88.5 in 2025. More recently, it has faced pressure, trading in the Rs 94-95 per dollar range before stabilising at around Rs 93.39. This volatility has been driven by high global oil prices and strong dollar demand amid geopolitical tension in West Asia.
Other factors include the outflow of foreign capital and rising hedging costs, which have also prompted intervention by the Reserve Bank of India (RBI) to manage rupee volatility and curb depreciation pressure in the coming years.
Overall, the statistics ministry revised nominal GDP growth downward by 2.8 to 3.8 per cent for the period between 2022-23 and 2023-24, which has affected the comparative size of the economy.
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