The report shows India's strong economic fundamentals.
- India's economy is projected to reach $20.7 trillion by 2030 and $34.2 trillion by 2038
- India is currently the fourth-largest economy with a nominal GDP of approximately $4.19 trillion
- The median age in India is 28.8 years, supporting a young and skilled workforce for growth
The Indian economy is projected to reach $20.7 trillion by 2030 and potentially $34.2 trillion by 2038, according to the August 2025 edition of EY Economy Watch. The report shows India's strong economic fundamentals, favourable demographics, and ongoing structural reforms as key drivers of its long-term growth.
With a median age of 28.8 years, high savings and investment rates, and a declining government debt-to-GDP ratio expected to fall from 81.3 per cent in 2024 to 75.8 per cent by 2030, India is well-positioned to outperform other major economies to become the second largest economy in about 13 years.
Now, with approximately $4.19 trillion, India is the fourth largest economy globally by nominal GDP.
If beyond 2030, India and the US maintain average growth rates of 6.5 per cent and 2.1 per cent, respectively, during 2028 -2030 (as per IMF forecasts), India may surpass the US economy in PPP terms by 2038, the report said.
"India's comparative strengths, its young and skilled workforce, robust saving and investment rates, and relatively sustainable debt profile will help sustain high growth even in a volatile global environment," DK Srivastava, Chief Policy Advisor at EY India said. "By building resilience and advancing capabilities in critical technologies, India is well-placed to move closer to its Viksit Bharat aspirations by 2047."
Among major economies, China is projected to reach $42.2 trillion GDP (measured at Purchasing Power Parity) by 2030 but faces challenges from an ageing population and rising debt. The US remains strong but contends with high debt exceeding 120 per cent of GDP and slower growth. Germany and Japan, though advanced, are constrained by older populations and heavy reliance on global trade.
Using PPP, $1 in India buys more goods and services than $1 in the US, making the country's economy appear larger compared to market exchange rates.
Structural reforms such as GST, Insolvency and Bankruptcy Code (IBC), UPI-driven financial inclusion, and production-linked incentives (PLI) are strengthening competitiveness across industries. India is also expected to become the third-largest economy in market exchange rate terms by 2028, overtaking Germany. Even potential challenges like US tariffs affecting 0.9 per cent of GDP are expected to have minimal impact, with strong domestic demand and export diversification containing any slowdown to just 0.1 percentage point.
