India’s share in the world gross domestic product (GDP) has increased from around three per cent in 1990 (at purchasing power parity-adjusted exchange rates) to around five per cent now, making it one of the fastest-growing economies in the world in recent years.
Growth in the three years preceding the global economic crisis (2005-2007) averaged an impressive 9.5 per cent. And in FY2011 the economy is projected to grow 8.8 per cent.
India’s economic success since the 1980s has been attributed to reforms aimed at strengthening macroeconomic stability and improving the supply-side of the economy. Key among the reform steps were fiscal consolidation, liberalisation of sectors, and the gradual opening of the external trade and finance channels. These steps have lifted India’s growth potential by raising productivity, spurring investments and strengthening human capital.
The IT and telecom revolution contributed to the success story of India’s services sector with growth picking up to 7.4 per cent from 2000 to 2010. And from 2005 to 2010 it averaged an impressive 8.6 per cent. This not only made India one of the fastest-growing economies but also helped it close the growth gap with China. The industrial sector also provided a number of success stories in the form of pharma, refinery and steel. (Click here for table & graph)
According to Citigroup Global Markets research, India expects to overtake Japan to become the third-largest economy in the world by 2015. The research also predicted that by 2020, China would have overtaken the US to become the world’s largest economy, while Italy would have dropped out of the top ten, to be followed by France by 2030, the UK by 2040, and Germany by 2050. Thus by 2050, the make-up of the world’s ten largest economies will bear little resemblance to the 2010 line-up.
India’s real per capita GDP is expected to grow at 6.4 per cent annually over the next 40 years between 2010 and 2050 (7.2 per cent a year over the next 10 years and at rates of 7.7 per cent a year between 2020 and 2030 and 5.2 per cent a year between 2030 and 2050). As a result, we expect India to become the world’s largest economy by 2050, overtaking China and the US in the process.
