NEW DELHI– India is projected to emerge as the world’s second-largest economy in purchasing power parity (PPP) terms by 2038, driven by strong demographics, rising domestic demand, and a resilient fiscal outlook, according to a new report by EY based on IMF projections.
The report estimates that India’s economy could reach $20.7 trillion (PPP terms) by 2030, ahead of the U.S., Germany, and Japan, though still behind China’s projected $42.2 trillion. While China faces challenges from an ageing population and mounting debt, India is expected to benefit from its youthful median age of 28.8 years in 2025, one of the highest savings rates among major economies, and a declining debt-to-GDP ratio — projected to fall from 81.3 per cent in 2024 to 75.8 per cent by 2030.
The United States, despite remaining robust, is projected to contend with debt exceeding 120 per cent of GDP and slower growth. Advanced economies like Germany and Japan are expected to struggle with ageing populations and heavy reliance on global trade.
In contrast, India’s growth story rests on favorable demographics, structural reforms, and resilient fundamentals. DK Srivastava, Chief Policy Advisor at EY India, said, “India’s comparative strengths — its young and skilled workforce, robust saving and investment rates, and relatively sustainable debt profile — will help sustain high growth even in a volatile global environment. By building resilience and advancing capabilities in critical technologies, India is well-placed to move closer to its Viksit Bharat aspirations by 2047.”
India is also projected to become the world’s third-largest economy in market exchange rate terms by 2028, overtaking Germany. (Source: IANS)
