India on the way of largest economic superpower

February 8, 2024
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India will emerge as the largest economic superpower by the end of the century, with gross domestic product (GDP) 90 percent larger than China’s and 30 percent larger than the US, Centre for Economics and Business Research (CEBR) said in its latest World Economic League Table report.

The report said that India will sustain robust growth, averaging 6.5 percent from 2024 to 2028, to surpass Japan and Germany as the world’s third-largest economy by 2032.

“India is expected to overtake both China and the US after 2080, based on demographic estimates and projections,” the report added.

The country’s large and youthful populations, a growing middle class, a dynamic entrepreneurial sector, and increasing global economic integration will be some key drivers of growth.

The study, however, said that India needs to address challenges such as poverty reduction, inequality, human capital, infrastructure improvement, and environmental sustainability.

India recorded a strong GDP growth of 7.2 percent in 2022-23. CEBR anticipates a slight moderation in growth at 6.4 percent for 2023-24, resulting in output surpassing prepandemic levels levels by 17.2 percent.

The report said that public sector dept posed a long-term growth constraint with government dept as a percentage of GDP expected the 81 percent in 2023, exceeding the 81 per cent recorded in 2022.

A recent report by the International Monetary Fund (IMF) had also warned that India’s general government dept could exceed 100 percent of GDP in the medium term.

The finance ministry, while stating that the IMF report was talking ”only of a worst-case scenario”, had clarified that the general government dept in India is overwhelmingly rupeedenominated, with external borrowings from bilateral and multilateral sources contributing a minimal amount.

“The rollover risk is low for domestic dept, and the exposure to volatility in exchange rates tends to be on the lower end,” the finance ministry had said.

The CEBR report also added that government borrowing is estimated at 8.8 percent of GDP in 2023. This reflects an expansionary stance with increased spending on infrastructure, healthcare, and social welfare, the report said.

The report also said that 2024 holds significance for India with the upcoming general elections expected to shape the country’s political trajectory for next five years.

It said, “The elections outcomes will significantly impact India’s domestic and foreign policy, as well as its relations with neighbouring countries and major global powers.”

CLIMBING THE CHARTS

WORLD ECONOMIC LEAGUE TABLE RANKING BY 2038