August 27, 2025
By 2030, India’s PPP GDP is projected at US$20.7 trillion, supported by youthful demographics and strong savings
The government debt-to-GDP ratio is expected to fall to 75.8% by 2030, unlike rising debt levels in peer economies
Structural reforms such as GST, IBC, UPI, and PLI schemes are strengthening industrial competitiveness
India is also on track to become the third-largest economy in market exchange rate terms by 2028, overtaking Germany
India could emerge as the world’s second-largest economy in purchasing power parity (PPP) terms by 2038, with a projected GDP of US$34.2 trillion, according to a report released by EY based on IMF projections. The firm also estimates that by 2030, India’s economy could reach US$20.7 trillion (PPP).
The report said India’s growth outlook is strengthened by favourable demographics, with a median age of 28.8 years in 2025, and the second-highest savings rate among major economies. Unlike its peers, India’s government debt-to-GDP ratio is projected to decline from 81.3 per cent in 2024 to 75.8 per cent by 2030, reflecting a more sustainable fiscal trajectory.
Comparing India with global peers, EY noted that while China is expected to remain the largest economy in PPP terms at US$42.2 trillion by 2030, its ageing population and rising debt remain structural challenges. The US economy continues to demonstrate resilience but faces debt levels exceeding 120 per cent of GDP and slowing growth. Meanwhile, Germany and Japan are constrained by high median ages and heavy reliance on global trade.
EY emphasised that India is uniquely positioned with youthful demographics, rising domestic demand, and a sustainable fiscal outlook, offering the most favourable long-term trajectory among major economies.
DK Srivastava, Chief Policy Advisor at EY India, observed that the country’s young and skilled workforce, high savings and investment rates, and sustainable debt profile will enable it to sustain growth even amid global volatility. He said that advancing resilience and capabilities in critical technologies would help India move closer to its Viksit Bharat aspirations by 2047.
The report highlighted that structural reforms such as GST, the Insolvency and Bankruptcy Code (IBC), financial inclusion through UPI, and production-linked incentives are bolstering competitiveness. Public investment in infrastructure, along with adoption of emerging technologies like artificial intelligence, semiconductors, and renewable energy, are also shaping long-term resilience.
India is projected to become the world’s third-largest economy in market exchange rate terms by 2028, overtaking Germany. EY cautioned, however, that while US tariffs could affect 0.9 per cent of India’s GDP, the overall growth impact can be contained to just 0.1 percentage point if countered with export diversification, stronger domestic demand, and new trade partnerships.
Source: Economic Times