India to become World’s 2nd-Largest Economy in terms of PPP by 2038: Report

India is likely to become the second-largest economy in the world on a purchasing power parity (PPP) basis by 2038, according to a new report. PPP is used to compare the relative price of a standard basket of products between places.

The EY report, based on IMF projections, estimates that India's economy may hit $20.7 trillion in terms of PPP by 2030, placing it ahead of the US, China, Germany, and Japan. In other leading world economies, India has a median age of only 28.8 years in 2025 and is second only in savings rates.

Government debt relative to GDP is forecast to fall from 81.3% in 2024 to 75.8% by 2030. Although China is predicted to be the world's largest economy, at $42.2 trillion in PPP terms by 2030, the report identifies risks from its ageing population and rising debt.

The United States remains economically powerful, but it struggles with debt levels over 120% of GDP and reduced growth. Germany and Japan, however, as advanced economies, are limited by aging populations and intense reliance on international trade, the report observes.

India, on the other hand, has backing from its young population, increasing domestic demand, and sustainable budgetary measures. "India's relative strengths, its educated and young workforce, healthy saving and investing rates, and relatively sustainable debt record will ensure that high growth is sustained even in a turbulent world environment," DK Srivastava, Chief Policy Advisor, EY India, commented.

He further said, "Through improving resilience and developing capabilities in key technologies, India is strongly positioned to get closer to its Viksit Bharat vision by 2047." Moreover, India is likely to overtake Germany and rank as the third-largest economy by market exchange rate terms by 2028.

The upward performance of the country is not only being fueled by favorable demographics but also structural reforms and robust economic fundamentals.