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India may rank as the world’s second-largest economy by the year 2038, as stated by EY. Due to solid economic foundations, a youthful demographic, and a sustainable fiscal health, India is anticipated to maintain its strong growth despite uncertainties worldwide. The document titled 'EY Economy Watch' indicated that if present growth patterns persist, India could achieve this status by 2038 in terms of purchasing power parity, with a projected GDP of $34.2 trillion. India possesses some distinct advantages that set it apart from many other major economies. The average age of individuals in India in 2025 will be around 28.8 years. This indicates a substantial workforce of young individuals poised to drive economic progress for years to come. Additionally, India boasts the second-highest savings rate among the world's biggest economies. This is beneficial as it indicates that more funds are accessible for significant projects and new enterprises.
Furthermore, the government's borrowing is actually decreasing. While other nations are experiencing rising debts, India's debt-to-GDP ratio is anticipated to decline from over 81% in 2024 to roughly 75% by 2030. The report also notes that India's robust economy is not overly dependent on international events. The large domestic market ensures that people within India engage in buying and selling, which keeps the economy healthy even when global trade slows down. The analysis contrasts India with other major economies like the USA, China, Germany, and Japan. Although these countries are very successful, they encounter significant challenges that India does not face. For instance, China is managing an aging population, and the USA has substantial debt. Germany and Japan also have older demographics and rely heavily on global trade, which presents some risks. In simple terms, India's combination of a youthful population, significant domestic demand, and solid financial health provides it with a promising avenue for sustained growth.
As per EY India’s Chief Policy Advisor, DK Srivastava, the nation’s strengths will aid its progress even when the global economy is struggling. He states that India is on a clear path toward realizing its vision of being a "Viksit Bharat" (developed India) by 2047. By 2028, India is also projected to become the third-largest economy in terms of market exchange rates, overtaking Germany. Even potential disturbances such as US tariffs impacting 0.9% of GDP are expected to have only a minor effect on growth if managed with export diversification and strengthening domestic demand. With a blend of a young workforce, increasing domestic consumption, disciplined fiscal policies, and structural reforms, India seems well-accomplished to advance in the global economic hierarchy in the upcoming decades.
