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New Delhi: India could climb to the position of the world’s second-largest economy in purchasing power parity (PPP) terms by 2038, with its GDP estimated to touch USD 34.2 trillion, according to EY’s analysis based on IMF forecasts.
EY highlighted that India stands apart among major economies, with a projected median age of 28.8 years in 2025, one of the highest savings rates globally, and a debt-to-GDP ratio likely to fall from 81.3 percent in 2024 to 75.8 percent by 2030—at a time when other large economies are grappling with rising debt, The Economic Times reported, citing the EY analysis of IMF report.
The consultancy cited IMF estimates that India’s GDP in PPP terms could reach USD 20.7 trillion by 2030.
Compared with the US, China, Germany, and Japan, India is uniquely positioned, it stressed.
“While China leads in overall size with a projected USD 42.2 trillion economy (PPP) by 2030, its ageing population and rising debt are challenges. The US remains strong but faces high debt levels exceeding 120 percent of GDP and slower growth rates. Germany and Japan, though advanced, are constrained by high median ages and heavy reliance on global trade,” said EY in a statement.
India, on the other hand, benefits from youthful demographics, expanding domestic consumption, and a sustainable fiscal outlook, giving it what EY calls the most promising long-term growth path.
DK Srivastava, Chief Policy Advisor, EY India, remarked, “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.”
According to the report, India’s economic trajectory is being driven not only by its demographic advantage but also by strong fundamentals and reform measures.
High saving and investment rates are fuelling capital formation, while fiscal consolidation is bolstering stability. Reforms such as the GST, IBC, financial inclusion through UPI, and production-linked incentives are enhancing competitiveness across sectors.
Meanwhile, public spending on infrastructure and adoption of new-age technologies like artificial intelligence, semiconductors, and renewable energy are preparing the ground for sustained resilience.
EY also projected that India could overtake Germany to emerge as the world’s third-largest economy in market exchange rate terms by 2028.
“While US tariffs may affect nearly 0.9 percent of India’s GDP, their impact on GDP growth can be contained to just 0.1 percentage point with appropriate countermeasures like export diversification, stronger domestic demand, and advancing trade partnerships,” EY added.
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