India's Economic Growth Projections
According to a report by EY, India is poised to become the world's second-largest economy in terms of purchasing power parity (PPP) by 2038 with a projected GDP of USD 34.2 trillion, based on IMF projections.
Key Strengths and Projections
- India's median age is expected to be 28.8 years by 2025.
- The country is projected to have the second-highest savings rate among major economies.
- Government debt-to-GDP ratio is expected to decline from 81.3% in 2024 to 75.8% by 2030.
- India's economy could reach USD 20.7 trillion (PPP) by 2030.
Comparative Analysis
- China: Projected to have a USD 42.2 trillion economy (PPP) by 2030 but faces challenges from an aging population and rising debt.
- US: Strong economy but with debt levels exceeding 120% of GDP and slower growth rates.
- Germany and Japan: Advanced economies but constrained by high median ages and reliance on global trade.
India's Growth Factors
India stands out due to its youthful demographics, rising domestic demand, and a sustainable fiscal outlook, giving it the most favorable long-term growth trajectory.
Structural Reforms and Resilience
- High saving and investment rates are driving capital formation.
- Fiscal consolidation is improving sustainability.
- Reforms such as GST, IBC, UPI, and production-linked incentives enhance competitiveness across industries.
- Public investments in infrastructure and technologies like AI, semiconductors, and renewable energy are paving the way for long-term resilience.
Global Economic Position
India is projected to become the third-largest economy in market exchange rate terms by 2028, overtaking Germany.
Challenges and Countermeasures
- US tariffs may affect nearly 0.9% of India's GDP.
- Impact on GDP growth can be minimized to 0.1 percentage point with strategies like export diversification, stronger domestic demand, and advancing trade partnerships.
Overall, India's combination of demographic advantages, structural reforms, and resilient fundamentals positions it well to achieve its Viksit Bharat aspirations by 2047.
