India may overtake China as the engine of global economic growth in the next few years, Bloomberg has reported. The country beat its north-eastern neighbor as the world’s most populous nation a year ago and India’s 1.4-billion population is a key growth factor, the outlet explains.
According to a Bloomberg Economics analysis, it may be as early as 2028 that India takes the title of number-one contributor to global growth on a purchasing power parity (PPP) basis. PPP compares economic productivity and standards of living between countries by adjusting for differences in costs of goods and services.
China’s $17.8 trillion “behemoth” economy is slowing, Bloomberg’s report notes, as it struggles to recover from the Covid-19 pandemic, as well as enduring economic pressure from the US and its allies. Western governments increasingly see Beijing as a rival rather than an economic partner, the outlet said. China’s economic growth is projected to slow to 3.5% by the end of the decade, from 5.2% in 2023. Various countries and businesses are seeking to diversify supply chains away from China, moving production to India instead, it adds.
India, meanwhile, has one of the fastest-growing economies in the world. In Bloomberg Economics’ base case scenario, it will accelerate to 9% growth by the end of the decade from the estimated 7.6% during the fiscal year that ended on March 31. Among its booming sectors are electronics manufacturing and the aviation industry.
The country’s large and young population is one of the major factors that could fuel economic growth. According to Bloomberg, some 48.6 million medium skilled workers – those typically employed at factories – will retire in China and advanced economies by 2040. India will add 38.7 million such workers during the same period.
The report explains that India’s success largely depends on whether the government improves infrastructure, reduces bureaucracy, and expands the skills and participation of the workforce. Its labor-force participation stood at 55.4% in 2022, according to the International Labour Organization, one of the world’s lowest ratios. In China, meanwhile, the workforce participation rate stands at 76%.
Prime Minister Narendra Modi, who has been in power since 2014 and will seek reelection in May, has promised to elevate India’s economy to the “top position” globally.
India’s is currently is the world’s fifth-largest economy. The US, with a GDP of $25.44 trillion dollars, is by far the world’s largest economy as of 2022. It is followed by China, Japan and Germany.
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