Sustained structural reforms could help India become the second biggest economy in the world by 2050, global audit firm PricewaterhouseCoopers says in a report. China would continue to maintain its hold as the world's largest economy, while the US would slip to the third position by 2050, the report adds.
PricewaterhouseCoopers measures the size of the economy in terms of purchasing power parity. According to the World Bank, purchasing power parity conversion (PPP) factor is the number of units of a country's currency required to buy the same amounts of goods and services in the domestic market as US dollar would buy in the United States. The report says PPP estimates adjust for price level differences across countries and therefore provide a better measure of the volume of goods and services produced than GDP at current market exchange rates.
The report pegs the size of Indian economy in PPP terms for the year 2014 at $7,277 billion. China is ranked at the top with size of its economy estimated at $17,632 billion and the US at $17,416 billion.
In 2050, Indian economy could grow to the size of $42,205 billion, only behind China's at $61,079 billion, says the report. The US could fall to the third place at $41,384 billion.
Source: PricewaterhouseCoopers
The report comes in the wake of Indian economy, measured by a difference yardstick, becoming the fastest growing major economy in the world in the December quarter.
New GDP data, measured by market prices instead of factor cost showed that Indian economy grew 7.5 per cent in the quarter ending in December, outpacing China's 7.3 per cent growth rate.
The new GDP data takes into account gross value addition in goods and services as well as indirect taxes. The base year has been shifted to 2011/12 from 2004/05. This reading of Indian GDP data, is however seen at odds with other indicators such as industrial production and trade data, which suggest the economy is still suffering from slack.
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