PricewaterhouseCoopers (PwC) reports that India could become the world’s third largest economy by purchasing power parity (PPP), overtaking Japan in 2012.

Though this prediction puts India almost 20 years ahead of Goldman Sachs’ projection of 2032 in its BRIC (Brazil, Russia, India, China) report.

Previously, Goldman Sachs study titled `Dreaming with BRICs: The Path to 2050‘ predicted that by the year 2040, if things go well, India will be the third largest economy in the world with a reasonably high per capita income. Report placed Brazil, Russia, India and China (identified as BRIC countries) among the fastest growing economies over the next 50 years.

John Hawksworth, PwC head of macroeconomics writes “While the exact date is open to doubt, it seems highly likely that, by 2030, China will clearly be the largest economy in the world on PPP”.

Given the comparative advantage of a skilled workforce available at low costs, backed by huge foreign exchange reserves and foodgrain surplus, India has a historical opportunity to fulfill both PWC and BRIC report predictions. However, many things can go wrong even with reasonable projections, especially over a long time horizon. In the case of India, both the government and the private sector need to increase investments in education.

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Tags: Goldman Sachs, Indian Economy, PricewaterhouseCoopers (PwC)

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