India will be third largest economy in 25 years: Report,0005.htm

Indo-Asian News Service
New York, June 1, 2005

India will surpass Japan to become the world's third largest economy within 25 years, says a research report by a leading American economist.

William T Wilson, chief economist for Keystone India which facilitates the flow of trade and investment between the US and India, said: "Demographics and economic reform are driving India's growth."

The Indian economy will be the third largest after the US and China in another 25 years, he said.

"With half the population under the age of 25, India will have the youngest labour force in the world, and its population is expected to exceed China's by 2030."

The report titled 'The India Century' examines and projects India's economic growth potential over the next half century using the latest data on demographic changes and policy reforms.

Wilson said India's working age population is expected to grow continuously over the next 40 years. At the same time, China is aging faster than any other country in history, largely due to its one child policy.

"India's economic reforms, which formerly were driven by responses to crises, are now driven by policy. Several key sectors, including pharmaceuticals, power, telecommunications, civil aviation, insurance and real estate, are now open to foreign direct investment.

"Many other positive steps have been taken, such as recognising product patents on drugs, lessening of bureaucratic controls and the recent announcement by the main opposition party that they will support ongoing reforms," he said.

"India has also made better use of invested capital than China. China's investment as a share of GDP is twice that of India, but its GDP growth rate has been only 50 per cent higher. Rising domestic investment is likely to lift India's trend GDP growth rate above seven per cent for some time," concludes Wilson.