India Set to Become World’s 2nd Largest Economy (PPP) by 2038

Current Context: The EY Economy Watch – August 2025 Edition, released on August 27, 2025 by Ernst & Young (EY India), projects India to become the world’s second-largest economy (PPP basis) by 2038.

• India’s GDP (PPP) is expected to reach USD 34.2 trillion, driven by strong demographics, high investment rates, and structural reforms like GST, IBC, UPI, and PLI.
• The country’s debt-to-GDP ratio is forecast to decline from 81.3% (2024) to 75.8% (2030), reflecting fiscal resilience.
• A youthful median age of 28.8 years and rising domestic demand are key growth enablers.
• Strategic investments in AI, semiconductors, and renewable energy will enhance long-term competitiveness.
• India’s trajectory stands out amid ageing global economies, aligning with the Viksit Bharat 2047 vision.

Question:

Q.1 According to the EY Economy Watch – August 2025 Edition, by which year is India projected to become the world’s second-largest economy on a PPP basis?
a) 2030
b) 2035
c) 2038
d) 2040

Answer: c) EY projects India to become the 2nd largest economy (PPP basis) by 2038 with a GDP (PPP) of USD 34.2 trillion.