Indian economy slips to sixth position globally with GDP at $3.92 trillion in FY26, says Pankaj Chaudhary
ADVERTISEMENT
Indian economy has slipped from the fourth position globally to sixth position at $3.92 trillion, according to the ministry of finance.
India’s nominal Gross Domestic Product (GDP) stood at $3.92 trillion in 2025-26, making the country the world’s sixth-largest economy, said minister of state for finance, Pankaj Chaudhary, citing International Monetary Fund’s (IMF) April 2026 World Economic Outlook.
The figure was disclosed by the government in Parliament on Tuesday, alongside data showing a sharp improvement in public sector banks’ asset quality.
Minister of State for Finance Pankaj Chaudhary, in a written reply to the Rajya Sabha, said the IMF’s ranking is based on nominal GDP converted at prevailing US dollar exchange rates. He also cautioned that rankings can change with movements in exchange rates and prices, revisions to national accounts, economic growth and changes in the size of other major economies.
It may be recalled that India had become the world’s fifth-largest economy in September 2022, when it overtook the UK in nominal GDP terms. In April 2025, the IMF projected that India would overtake Japan to become the fourth-largest economy in 2025, with nominal GDP estimated at $4.187 trillion.
On December 30, 2025, the government’s year-end economic review said India had indeed surpassed Japan, putting its GDP at around $4.18 trillion and making it the world’s fourth-largest economy.
However, the IMF’s April 2026 World Economic Outlook subsequently placed India sixth for 2025-26, with nominal GDP at $3.92 trillion. Japan and the UK moved ahead of India in the latest ranking. The latest ranking effectively reversed the earlier fourth-place projection, with Japan and the UK moving ahead of India in the latest estimates, as per the global financial agency.
Govt bets on manufacturing to drive growth
The government is pursuing a broad-based strategy to raise the economy’s growth potential, with manufacturing, agriculture, infrastructure and MSMEs forming key pillars of the approach.
Chaudhary said measures include Production-Linked Incentive (PLI) schemes, easing of Quality Control Orders, higher agricultural productivity and expansion of infrastructure. Logistics efficiency is being targeted through PM Gati Shakti and the National Logistics Policy, while innovation, digitalisation and research are also part of the strategy.
Public capital expenditure, a liberalised foreign direct investment regime and reforms in direct taxation and GST are being used to support investment. The government is also seeking to strengthen India’s external competitiveness through free trade agreements and broader economic partnership arrangements.
Data from the National Securities Depository Ltd showed that gross sales by foreign portfolio investors stood at ₹29.8 lakh crore between January and August 5, 2026.
PSB GNPAs drop to ₹2.46 lakh crore
The banking sector’s asset quality has improved substantially over the same period. Gross non-performing assets of public sector banks fell to ₹2,45,634 crore as of March 31, 2026, from ₹3,39,541 crore two years earlier—a decline of nearly 28%.
The GNPA ratio of PSBs also declined to 1.93% from 3.47% during the period, indicating a significant reduction in stressed assets on bank balance sheets.
Bank fraud cases plunge 89% in two years
The number of frauds reported by public sector banks dropped sharply from 54,850 in 2023-24 to 5,786 in 2025-26.
According to inputs from PSBs, staff accountability was fixed in 5,147 cases over the last three financial years, while FIRs were filed in 9,451 cases against borrowers responsible for frauds.
Separately, unclaimed deposits held with the Reserve Bank of India’s Depositor Education and Awareness Fund stood at ₹86,917.08 crore as of June 30, 2026. The RBI had reimbursed banks ₹17,414.68 crore from the fund against payments made by them to claimants.