India’s emergence as a larger contributor to global GDP growth than the United States is not a statistical anomaly—it is the outcome of deep-rooted economic strengths aligning at the right moment. According to the IMF’s 2026 projections, India will account for about 17% of incremental global growth, compared with the US share of 9.9%. This widening gap reflects a combination of faster growth, scale effects, and resilience at a time when much of the developed world is slowing.
At the core of this shift is the simple arithmetic of growth multiplied by size. India is now a multi-trillion-dollar economy growing at more than double the pace of the United States. Even incremental gains therefore translate into outsized contributions to global expansion. The IMF underscores that India’s performance is being driven less by external demand cycles and more by domestic economic momentum—an increasingly valuable advantage in an era of fragmented trade and geopolitical uncertainty.
Growth Differential: Speed Matters
India’s growth outlook for FY26 is projected in the range of roughly 6.3% to 7.3%, significantly above the US forecast of around 2.4%. This divergence explains much of the gap in global contribution. While the US economy is encountering fiscal tightening, higher interest rates, and the drag from tariff escalations, India is benefiting from easing inflation, accommodative policy support, and improving balance sheets across households and firms.
Crucially, India’s growth engine is not overly dependent on exports. Domestic demand—consumption, investment, and government spending—plays a far larger role than in many advanced economies. This insulation from global trade slowdowns allows India to maintain momentum even as international conditions remain volatile.
Infrastructure as a Growth Multiplier
Another decisive factor has been India’s sustained infrastructure push. A sharp rise in capital expenditure through 2024 and 2025 has begun to yield tangible economic dividends. Investments in highways, ports, logistics, railways, and digital infrastructure have lowered transaction costs and improved productivity across sectors.
Manufacturing output has benefited disproportionately, helping India capture supply-chain diversification flows as companies seek alternatives to China. High-profile investment interest—from global EV makers to electronics manufacturers—has reinforced the perception of India as a scalable, long-term production base. This infrastructure-led productivity boost has amplified growth even as global trade volumes moderated.
Consumption Resilience in an Uncertain World
Private consumption remains a critical stabiliser. Strong urban demand, a recovery in rural incomes, and targeted fiscal measures have supported spending despite global headwinds such as protectionist trade policies and geopolitical tensions. The IMF has repeatedly revised India’s near-term growth upward, citing better-than-expected consumption performance—a sharp contrast to advanced economies, where aggregate growth is expected to hover around 1.8%.
This resilience matters globally. In a slowing world economy, countries that can sustain internal demand contribute disproportionately to overall growth, magnifying India’s global impact.
Demographics and Structural Reform Advantage
India’s demographic profile further strengthens its position. With a population of around 1.4 billion and a relatively young workforce, India enjoys a steady expansion of its labour pool—unlike the United States and other advanced economies facing aging populations. This demographic dividend supports long-term expansion in services, manufacturing, and technology-intensive sectors.
Policy reforms have complemented this advantage. Production-linked incentive schemes, efforts to localise manufacturing, and reforms aimed at improving ease of doing business are gradually reducing import dependence and building domestic value chains.
A New Growth Anchor
India surpassing the US in IMF growth contributions reflects more than cyclical outperformance. It signals a structural realignment in the global economy, where scale, domestic demand, infrastructure, and demographics increasingly determine who drives growth. As long as these pillars remain intact, India is likely to remain a central anchor of global economic expansion.
(With agency inputs)
