India to become world's 2nd-largest economy by 2038: EY
What's the story
India is poised to become the world's second-largest economy in terms of purchasing power parity (PPP) by 2038, a new report by EY has said. The country's GDP is projected to reach $34.2 trillion during this period, based on International Monetary Fund (IMF) projections. By 2030, India's economy is expected to grow to $20.7 trillion, the report said while citing IMF data.
Comparative analysis
India's position against other major economies
The EY report highlights India's unique position among major economies such as the US, China, Germany, and Japan. It notes that while China is projected to have a $42.2 trillion economy by 2030, it faces challenges like an aging population and rising debt. The US has high debt levels over 120% of GDP and slower growth rates.
Growth potential
Factors contributing to India's growth trajectory
India's youthful demography, rising domestic demand, and sustainable fiscal outlook give it the most favorable long-term growth trajectory. DK Srivastava, Chief Policy Advisor at EY India, said these factors will help sustain high growth even in a volatile global environment. He added that by building resilience and advancing capabilities in critical technologies, the country is well-placed to move closer to its Viksit Bharat aspirations by 2047.
Market growth
India to become 3rd-largest economy in market exchange rate
India is also projected to become the third-largest economy in market exchange rate terms by 2028, surpassing Germany. EY said while US tariffs may impact nearly 0.9% of India's GDP, their effect on GDP growth can be contained to just 0.1% with proper countermeasures like export diversification, stronger domestic demand, and advancing trade partnerships.