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Key Points

India is projected to become the world's second-largest economy in PPP terms by 2038 according to the latest EY report. The country's economy could reach $20.7 trillion by 2030, surpassing major economies like the US and Japan. India's youthful demographics with a median age of 28.8 years and declining government debt ratios provide strong fundamentals. Structural reforms and rising domestic demand position India for sustained high growth despite global volatility.

Key Points: India Set to Become World's Second Largest Economy by 2038

  • India's median age of 28.8 years provides significant demographic advantage
  • Government debt-to-GDP ratio projected to decline to 75.8% by 2030
  • Second-highest savings rate among major global economies
  • Structural reforms and domestic demand driving sustainable growth trajectory
2 min read

India projected to become world's 2nd-largest economy in PPP terms by 2038: Report

EY report projects India to reach $20.7 trillion in PPP terms by 2030, surpassing US and Japan due to youthful demographics and strong fundamentals.

"India is well-placed to move closer to its Viksit Bharat aspirations by 2047 - DK Srivastava, EY India"

New Delhi, Aug 27

When it comes to purchasing power parity (PPP), India is likely to become the world's second-largest economy in PPP terms by 2038, a new report showed on Wednesday.

PPP is effectively the ratio of the price of a market basket at one location divided by the price of the basket of goods at a different location.

According to the EY report, based on IMF projections, India's economy could reach $20.7 trillion (PPP terms) by 2030, better placed than the US, China, Germany, and Japan.

Among the largest economies, India stands out with a median age of 28.8 years in 2025 and the second-highest savings rate.

The government debt-to-GDP ratio is projected to decline from 81.3 per cent in 2024 to 75.8 per cent by 2030.

While China leads in overall size with a projected $42.2 trillion economy (PPP) by 2030, its ageing population and rising debt are challenges, according to the report.

The US remains strong but faces high debt levels exceeding 120 per cent of GDP and slower growth rates.

Germany and Japan, though advanced, are constrained by high median ages and heavy reliance on global trade, according to the EY report.

On the other hand, India has youthful demographics, rising domestic demand, and a sustainable fiscal outlook.

According to DK Srivastava, Chief Policy Advisor, EY India, 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," he noted.

India is also projected to become the third-largest economy in market exchange rate terms by 2028, overtaking Germany.

The country's trajectory is reinforced not just by demographics but also by structural reforms and resilient fundamentals.

- IANS

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Reader Comments

P
Priya S
Great to see these projections, but I hope this growth reaches all sections of society. We need to ensure inclusive development, not just GDP numbers.
R
Rohit P
The declining debt-to-GDP ratio is particularly encouraging. Shows our fiscal management is on the right track. Hope we can maintain this momentum!
M
Michael C
As someone working in India's tech sector, I can see the innovation happening here. If we focus on R&D and infrastructure, these projections are achievable.
S
Sarah B
While the numbers look impressive, we must remember that PPP calculations have limitations. The real test will be per capita income and quality of life improvements.
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Vikram M
China's aging population vs India's youth advantage - this is our biggest strength. But we need to skill our youth properly to capitalize on this opportunity.
K
Kavya N
Hope this economic growth translates into better healthcare, education, and infrastructure for common people. That's the real measure of development 💪

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