India is projected to ascend to the position of the world’s second-largest economy in purchasing power parity (PPP) terms by 2038, according to a new report released by EY. Based on IMF projections, the report estimates India’s economy could reach a staggering $20.7 trillion in PPP terms by 2030, surpassing the United States, Germany, and Japan, and trailing only China.
The report highlights India’s demographic advantage, with a median age of 28.8 years in 2025, and the second-highest savings rate among major economies. These factors, coupled with a declining government debt-to-GDP ratio—from 81.3 percent in 2024 to 75.8 percent by 2030—are expected to sustain high growth in a volatile global environment.
While China is projected to maintain the lead with a $42.2 trillion PPP economy by 2030, its ageing population and rising debt levels pose significant challenges. The United States, though resilient, faces high debt exceeding 120 percent of GDP and slower growth. Germany and Japan are constrained by high median ages and heavy reliance on global trade.
India’s trajectory is reinforced by structural reforms, resilient fundamentals, and rising domestic demand. The country is also expected to become the third-largest economy in market exchange rate terms by 2028, overtaking Germany.
According to EY India’s Chief Policy Advisor DK Srivastava, India’s young and skilled workforce, robust savings and investment rates, and relatively sustainable debt profile will help the country maintain momentum. He emphasized that building resilience and advancing capabilities in critical technologies will be key to achieving the vision of Viksit Bharat by 2047.
The report positions India as a standout performer among global economies, driven by its demographic dividend, fiscal discipline, and reform-oriented governance.
