India grows faster, yet has miles to go to beat China's trillions

India is set to achieve its highest single-year GDP addition of $383 billion in 2025, according to estimates from the International Monetary Fund (IMF). This figure will be a record for India, except for the post-Covid surge in 2021. Despite India's projected growth rate of 6.5% in 2025, surpassing China's 4.5%, China is expected to add $1.26 trillion to its economy during the same period.

The difference in economic expansion between the two nations is attributed to China's history of consistently achieving double-digit growth. Since 1980, China has registered growth rates above 10% on 15 occasions, including a remarkable stretch from 1983 to 1995 when it saw double-digit growth in 9 out of 13 years. On the other hand, India has yet to witness a single year of double-digit GDP growth, with the highest recorded being 9.6% in 1988.

In 2021, India recorded a 9.7% post-pandemic economic rebound. In 2022, India's economy grew by 7%, while China reported a lower growth rate of 3% but managed to avoid a Covid-induced economic collapse in 2020.

In 1980, India and China had economies of comparable sizes. However, by 2029, China's GDP is projected to be four times larger than India's. For India to match China's anticipated GDP addition of $1.26 trillion in 2025, its economy would need to grow by 32% in dollar terms over the previous year—a challenging target by any measure.

The gap in prosperity between the two nations is also expected to widen as China benefits from a shrinking population. With China's population projected to be half its current size by the end of the century, its per capita income in dollar terms will likely see more significant gains, further accentuating the economic disparity with India.