India Could Become the World's Second-Largest Economy in PPP terms by 2038: EY Report

India’s economic rise is set to accelerate over the next decade, with consultancy EY forecasting that the country will become the second-largest economy in the world in purchasing power parity (PPP) terms by 2038. 

The outlook, built on favourable demographics, high savings and a prudent fiscal path, suggests India’s GDP in PPP terms could expand to $20.7 trillion by 2030, overtaking the United States, Germany and Japan, while remaining behind China.

India’s Growth Edge Over Global Peers

While China is expected to remain the largest economy at $42.2 trillion in PPP terms by 2030, its ageing population and rising debt pose headwinds. The United States, despite its resilience, faces the challenge of debt levels exceeding 120% of GDP along with slowing growth. Advanced economies like Germany and Japan also confront demographic constraints and heavy reliance on global trade. 

By contrast, India’s advantage lies in its young population, with a median age of 28.8 years in 2025, combined with strong savings and investment rates. Government debt, which stood at 81.3% of GDP in 2024, is projected to fall to 75.8% by 2030, reflecting a more sustainable fiscal stance.

Reforms And Projections

EY’s report highlights India’s ongoing structural reforms, resilient macro fundamentals and targeted investments in critical technologies as the pillars of its growth story. By 2028, the country is expected to overtake Germany to become the third-largest economy in market exchange rate terms.

As per news reports, commenting on the outlook, DK Srivastava, Chief Policy Advisor at EY India, said: “India’s 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.”

Long-Term Vision

The consultancy added that India’s trajectory is aligned with the government’s Viksit Bharat 2047 vision, which aspires to position the country among the world’s developed nations. With a combination of demographic strength, fiscal discipline and innovation-led growth, EY suggests India is on track to consolidate its position as a global economic powerhouse.

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Conclusion

EY projects India’s steady rise among leading economies, driven by favourable demographics, declining debt, and consistent reforms. The country is expected to reach $20.7 trillion in PPP terms by 2030 and become the world’s second-largest economy by 2038, reflecting strong fundamentals and alignment with the Viksit Bharat 2047 vision.

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