GDP: Why India is now further away from becoming a $5 trillion economy

Last week, India’s Ministry of Statistics and Programme Implementation (MoSPI) came out with new estimates of Gross Domestic Product, or GDP. The GDP is essentially the market price of all “final” (as against intermediate) goods and services that are produced within the geographical boundaries of India. The GDP shows the size of India’s economy. Broadly speaking, the bigger the size of the economy, the more prosperous a country is. From time to time, GDP estimates have to be refreshed because every economy, especially one as dynamic as India’s, goes through several changes, such as the prices people pay, the goods and services they purchase, etc. To get a more accurate picture, MoSPI comes out with regular revisions of India’s GDP. The new series takes a fresh guard from 2022-23 — that is, the financial year starting April 2022 and ending in March 2023. This now forms the new “base year” for GDP calculations. MoSPI has released the updated GDP for the years since and, in some time, it will release the GDP of the year before the new base year. Here are the three biggest takeaways from the new GDP series. ## 1. The size of India’s economy is smaller than what was previously understood. As CHART 1 shows, the existing estimates of India’s GDP (the old estimates, represented by the orange bar), were bigger than the new ones (represented by blue bars). For instance, in 2022-23, MoSPI now estimates that India’s GDP was Rs 261 lakh crore and not Rs 269 lakh crore as previously understood. Similarly, for the current financial year, India’s GDP is not Rs 357 lakh crore but Rs 345 lakh crore. As the next two charts will show, this change has implications all around. ## 2. The income of an average Indian is lower than what was previously assumed According to the old GDP estimates (shown in orange bar in CHART 2), an average Indian’s annual income in the current financial year was just over Rs 2.5 lakhs. This is calculated by dividing the overall GDP by the size of the population. To be sure, Rs 2,51,393 as income for the whole year is quite low as an average income both from a global perspective as well as domestic assessment. For instance, in the 2025 Budget the Indian government provided a income tax waiver to all those who earned less than Rs 12 lakhs per annum. That’s because the government wanted to provide relief and allow people earning upto Rs 1 lakh a month to save some more and hopefully have more money to spend. The new GDP estimates (shown in blue bars) find that the average annual income in India in 2025-26 is even lower at Rs 2,43,180. That’s a monthly income of Rs 20,265. 3. India is further away from becoming a $5 trillion economy While nominal GDP is calculated in Indian rupees, for global comparison, it is converted in US dollar terms by dividing the GDP by the exchange rate. CHART 3 shows the growth of India’s GDP in US dollar terms according to the outgoing estimates (shown in orange columns) with the red bar marking the $5 trillion level. The Central government set the target of a $5 trillion economy back in 2018-19, with an intention of achieving it by 2024. According to the old estimates, India’s GDP in 2025-26 had crossed the $4 trillion mark. But thanks to the new estimates pegged GDP at a lower level, as well as the fall in rupee’s exchange rate against the US dollar, India’s GDP is now at around $3.9 trillion, assuming an average exchange rate of Rs 88 to a dollar in the current financial year. Udit Misra is Senior Associate Editor at The Indian Express. Misra has reported on the Indian economy and policy landscape for the past two decades. He holds a Master’s degree in Economics from the Delhi School of Economics and is a Chevening South Asia Journalism Fellow from the University of Westminster. Misra is known for explanatory journalism and is a trusted voice among readers not just for simplifying complex economic concepts but also making sense of economic news both in India and abroad. Professional Focus He writes three regular columns for the publication. ExplainSpeaking: A weekly explanatory column that answers the most important questions surrounding the economic and policy developments. GDP (Graphs, Data, Perspectives): Another weekly column that uses interesting charts and data to provide perspective on an issue dominating the news during the week. Book, Line & Thinker: A fortnightly column that for reviewing books, both new and old. Recent Notable Articles (Late 2025) His recent work focuses heavily on the weakening Indian Rupee, the global impact of U.S. economic policy under Donald Trump, and long-term domestic growth projections: Currency and Macroeconomics: "GDP: Anatomy of rupee weakness against the dollar" (Dec 19, 2025) — Investigating why the Rupee remains weak despite India's status as a fast-growing economy. "GDP: Amid the rupee's fall, how investors are shunning the Indian economy" (Dec 5, 2025). "Nobel Prize in Economic Sciences 2025: How the winners explained economic growth" (Oct 13, 2025). Global Geopolitics and Trade: "Has the US already lost to China? Trump's policies and the shifting global order" (Dec 8, 2025). "The Great Sanctions Hack: Why economic sanctions don't work the way we expect" (Nov 23, 2025) — Based on former RBI Governor Urjit Patel's new book. "ExplainSpeaking: How Trump's tariffs have run into an affordability crisis" (Nov 20, 2025). Domestic Policy and Data: "GDP: New labour codes and opportunity for India's weakest states" (Nov 28, 2025). "ExplainSpeaking | Piyush Goyal says India will be a $30 trillion economy in 25 years: Decoding the projections" (Oct 30, 2025) — A critical look at the feasibility of high-growth targets. "GDP: Examining latest GST collections, and where different states stand" (Nov 7, 2025). International Economic Comparisons: "GDP: What ails Germany, world's third-largest economy, and how it could grow" (Nov 14, 2025). "On the loss of Europe's competitive edge" (Oct 17, 2025). Signature Style Udit Misra is known his calm, data-driven, explanation-first economics journalism. He avoids ideological posturing, and writes with the aim of raising the standard of public discourse by providing readers with clarity and understanding of the ground realities. You can follow him on X (formerly Twitter) at @ieuditmisra ... Read More