India is on the verge of a historic economic milestone, poised to become the fourth-largest economy in the world by FY26, surpassing Japan’s GDP, as projected by the International Monetary Fund (IMF). This remarkable ascent from the eleventh-largest economy in 2014 to the fourth place within just over a decade is more than a simple statistical achievement — it is the result of focused governance reforms, strategic vision, and transformational leadership under Prime Minister Narendra Modi.

A Decade of Economic Transformation

When PM Modi assumed office in 2014, India’s economic situation was drastically different. Under the previous UPA regime, India was labelled as one of the “Fragile Five” economies. This term underscored weak investor confidence, deteriorating macroeconomic indicators, and a sluggish policy environment hampered by indecision and paralysis. Capital expenditure (capex), which is a critical driver of long-term economic growth, was notably neglected. Data shows that the share of capex in total government expenditure fell sharply from 23% in 2003-04 to an average of just 12% between 2005 and 2014. This lack of prioritization on infrastructure and growth investments imposed a heavy opportunity cost on the economy, limiting its potential for expansion and modernization.

In stark contrast, the Modi government has ushered in a new era of governance, emphasizing infrastructure development, fiscal discipline, and efficient public service delivery. Capital expenditure has surged to over 21% of total expenditure in FY2023-24, representing a 3.7 times increase in infrastructure spending compared to the previous government, as highlighted by Finance Minister Nirmala Sitharaman. This robust increase in capex is not merely an accounting figure; it has a multiplier effect estimated at 4.8 times on the economy, according to the National Institute of Public Finance and Policy, underscoring the long-term benefits of such investments.

Infrastructure: The Backbone of Growth

The fruits of these investments are visible across various sectors. Road connectivity has dramatically improved, which has directly reduced logistics costs, boosted local businesses, and attracted more investments. Official estimates indicate that India is now saving between Rs 2.4 trillion and Rs 4.8 trillion annually in logistics expenses, thanks to better roads and transportation networks.

Urban mobility has also undergone a remarkable transformation. Before 2014, India had a modest 229 km of metro rail network. By 2025, this network has expanded to over 1,000 km across 23 cities and 11 states, making India the third-largest metro network globally, after China and the United States. This expansion has not only eased urban congestion but also contributed to economic productivity and enhanced the quality of life for millions.

Ports have similarly seen massive efficiency improvements. The average turnaround time for major ports has been reduced by almost half—from 93.59 hours in 2013-14 to just 48.06 hours in 2023-24—facilitating faster trade and export operations. Such efficiency gains are crucial in integrating India into global value chains and boosting its export potential.

Foreign exchange reserves have also swelled impressively, increasing from $292 billion in March 2013 to over $690 billion as of May 2025. This buildup of reserves strengthens India’s economic resilience, providing a buffer against global economic uncertainties.

Financial Inclusion and Digital Empowerment

Financial inclusion has become a pillar of India’s growth narrative. The Pradhan Mantri Jan Dhan Yojana (PMJDY), launched shortly after Modi took office, has been instrumental in bringing millions into the formal banking system. As of early 2025, over 54.57 crore Jan Dhan accounts have been opened, with more than half held by women and a significant portion in rural and semi-urban areas. This has enabled direct benefit transfers, reduced leakages in welfare programs, and empowered individuals with access to credit and savings instruments.

A Thriving Startup Ecosystem

Under the previous government, India’s startup momentum was limited. But under PM Modi, with initiatives like Startup India, regulatory reforms, and investment in digital infrastructure, India has blossomed into the third-largest startup ecosystem globally. Thousands of startups across sectors such as agritech, fintech, and artificial intelligence are innovating and transforming the economic landscape, attracting global investors and creating millions of jobs.

IMF’s Confidence and Future Outlook

The IMF’s projection of India as the fastest-growing major economy for 2025 and 2026, with growth rates above 6%, reflects global confidence in India’s growth story. This forecast is grounded in a decade of strong macroeconomic fundamentals, sustained reforms, and a pro-investment environment that continues to improve.

It is worth reflecting on the transformation compared to the early 2010s. In 2014, even then-Finance Minister P. Chidambaram’s expectation of India becoming the third-largest economy took decades. Today, India is already the fourth-largest and may become the third within a few years. This rapid leap is a testament to visionary leadership, effective governance, and the resilience of the Indian economy.

Conclusion

India’s journey from a fragile to a formidable economy highlights how strategic governance and infrastructure investments can redefine a nation’s future. The contrast between the UPA era’s missed opportunities and the Modi government’s dynamic reforms is clear. Today, India stands confident and self-reliant, ready to claim its place among the world’s economic powerhouses, supported by strong infrastructure, financial inclusion, and a thriving innovation ecosystem.

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