New Delhi– India is on track to become the world’s second-largest economy in purchasing power parity (PPP) terms by 2038, according to a new EY report based on IMF projections.
The study estimates that India’s economy could reach $20.7 trillion in PPP terms by 2030, surpassing the United States, Germany, and Japan, while trailing only China. PPP measures the relative value of currencies by comparing the cost of a common basket of goods across countries.
Among major economies, India stands out for its youthful demographics, with a median age of 28.8 years in 2025, and for having one of the highest savings rates. The government’s debt-to-GDP ratio is expected to fall from 81.3 percent in 2024 to 75.8 percent by 2030, supporting a sustainable fiscal outlook.
China, projected to lead with a $42.2 trillion PPP economy by 2030, faces headwinds from an aging population and high debt levels. The U.S. continues to demonstrate resilience but is weighed down by debt exceeding 120 percent of GDP and slower growth. Meanwhile, Germany and Japan confront structural challenges tied to aging populations and dependence on global trade.
In contrast, India benefits from rising domestic demand, robust savings and investment, and a young, skilled workforce. “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,” said DK Srivastava, Chief Policy Advisor, EY India.
He added that by advancing critical technologies and strengthening resilience, the country is well-positioned to progress toward its “Viksit Bharat” vision by 2047.
The report also projects that India will become the world’s third-largest economy in market exchange rate terms by 2028, overtaking Germany. This trajectory, EY said, is driven not just by demographics but also by structural reforms and strong economic fundamentals. (Source: IANS)
