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According to the Ernst & Young (EY) report, India is projected to become the world’s second-largest economy in Purchasing Power Parity (PPP) terms by 2038.

Economy Business | Dated: 30 Aug 2025

In August 2025, Ernst & Young (EY) released its August 2025 edition of EY Economy Watch, highlighting that India is set to become the world’s second-largest economy in terms of Purchasing Power Parity (PPP) by 2038, with its Gross Domestic Product (GDP) estimated at USD 34.2 trillion. The projections are based on International Monetary Fund (IMF) growth estimates for the years 2028–2030.

🎯 Key Highlights:

  • - The EY report stated that India’s GDP in PPP terms is expected to reach USD 20.7 trillion by 2030, positioning it as the third-largest economy after China (USD 42.2 trillion) and the United States of America (USA). With continued momentum, India is forecasted to surpass the USA in PPP terms by 2038, becoming the second-largest global economy.
  • - India’s robust growth trajectory is attributed to strong fundamentals such as youthful demographics with a median age of just 28.8 years in 2025, high domestic demand, and the world’s second-highest savings rate.
  • - In addition, a sustainable fiscal framework with government debt-to-GDP ratio under manageable levels further strengthens long-term prospects.

💡 Other Important Facts:

  • (i) The report highlighted that while the USA maintains economic strength, it faces slower long-term growth and debt levels exceeding 120% of GDP. Meanwhile, advanced economies like Germany and Japan struggle with ageing populations, high median ages, and significant dependence on global trade, limiting their future growth potential.
  • (ii) According to the International Monetary Fund (IMF), the average projected growth rate for India during 2028–2030 is 6.5%, significantly outpacing the USA’s 2.1% over the same period. This growth differential underpins India’s potential to climb to the second position in global PPP rankings by 2038.
  • (iii) EY emphasized that if both India and the USA sustain their projected growth rates beyond 2030, India will overtake the USA in PPP GDP rankings within the following decade. This projection reinforces India’s role as a key driver of global economic expansion in the 21st century.

📚 Test Your Knowledge:

According to the recently released Ernst & Young (EY) report, by which year is India projected to become the world’s 2nd largest economy in Purchasing Power Parity (PPP) terms?

Correct Answer: 2038

🚀 Quick Recap: