India’s Economy Is Rising in Global Rankings, Will Millions Rise With It?

From the Editor’s Desk

March 22, 2026

India is on track to become the world’s fourth largest economy in nominal gross domestic product, a measure of output at current market prices, as it moves toward overtaking Japan. But, one of the world’s top consulting firms asks if this rise in the global rankings on paper translate into larger gains for the people who live and work in India?

The Boston Consulting Group, or BCG, a global management consulting firm that advises companies and governments, said in a report that projections show India is likely to pass Japan soon and could move ahead of Germany by the end of the decade to take third place. The firm said three decades of annual growth of 6% to 7% helped turn India from a half-trillion-dollar economy into a $4 trillion economy.

That long expansion, according to BCG, has been driven by privatisation, the rapid growth of information technology services and heavy investment in infrastructure. The firm said India’s IT services sector now contributes more than 5% of GDP, while airports, ports and road networks have been modernised through infrastructure spending. BCG also said the number of billion dollar businesses in India has multiplied since the 1990s.

Over the past decade, India’s stock market gave investors an average yearly return of 15.2%, according to BCG’s India Value Creators Report 2025, doing better than the S&P 500, a major index of large U.S. companies.

Alpesh Shah, a managing director and senior partner who leads BCG’s CEO Advisory in the Asia Pacific region, said India’s growth is opening fresh opportunities for businesses and investors, but seizing those opportunities will require new strategies rather than the ones that worked in earlier stages of the country’s rise.

India’s economy is growing larger, but the average income of individual Indians remains much lower. BCG said India’s GDP per capita stands at just over $3,000 and that only 5% to 10% of the population enjoys prosperity comparable to that seen in the European Union and the United States. BCG uses the figures to argue that India’s rise in the global economic rankings will matter most if the gains reach a much wider share of its 1.4 billion people.

BCG said India’s median age is 28 and that millions enter the workforce every year, giving the country a demographic dividend, a potential boost from a young working-age population. The same trend also carries risk if the economy fails to generate enough employment for new entrants.

BCG said manufacturing could help India create more jobs, even though the sector’s share of the economy fell from 17% to 13% over the past decade. Shah said one new manufacturing job creates 2.2 more jobs elsewhere in the economy, while one new service sector job creates fewer than one. BCG said that is why manufacturing matters so much for employment, especially in sectors such as precision equipment, specialty chemicals, pharma intermediates, electronics assembly and textiles, where companies can still create large numbers of jobs and face a lower risk of replacing workers with machines.

The country’s agriculture economy presents a separate challenge. BCG noted that more than 60% of Indians depend on farming to make a living, yet average farm sizes remain too small to justify investments that could raise productivity. The firm also said inefficiencies in distribution mean farmers receive only 25% of what consumers pay for produce, limiting rural income even as the larger economy grows.

BCG said India will have to spread the gains of growth more widely in both cities and villages. It said cities need more investment in basic infrastructure, affordable housing and public transport so that more people can live and work there with greater ease. The firm also said that bringing more women into the urban workforce would create more opportunities for workers and for businesses.

A World Bank estimate cited by BCG said global GDP could rise by more than 20% if female employment and entrepreneurship matched male rates. BCG said India’s own effort to become a high-income economy will depend in part on whether growth reaches more households, more workers and more regions instead of remaining concentrated in a relatively small share of the population.

The firm also argued that companies will have to think beyond domestic expansion alone. BCG said India is large enough to serve as a platform for globally competitive companies and noted that several sectors now permit significant foreign investment, increasing pressure on domestic firms to compete at home and abroad. On technology, the firm said India has the technical talent to benefit from artificial intelligence and that companies embedding AI into their operating models will define the next phase of competition. BCG’s latest research said 90% of CEOs believe AI agents will produce measurable returns in 2026, and half believe their jobs depend on getting AI right.

Shah said the larger question is how far this economic rise will be felt in the daily lives of India’s 1.4 billion people.

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