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India will be third largest economy: U.S. report
By agencies
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Wednesday, 01 June 2005, 19:30 IST
NEW DELHI: India will surpass Japan to become the world's third largest economy within 25 years, says a research report by an American economist.
William T Wilson, chief economist for Keystone India said: "Demographics and economic reform are driving India's growth."
The Indian economy will be the third largest after the U.S. and China in another 25 years, he said.
The report titled 'The India Century' examines and projects India's economic growth potential over the next half century using the latest data on demographic changes and policy reforms.
Wilson said India's working age population is expected to grow continuously over the next 40 years. At the same time, China is aging faster than any other country in history, largely due to its one child policy.
"India's economic reforms, which formerly were driven by responses to crises, are now driven by policy. Several key sectors, including pharmaceuticals, power, telecommunications, civil aviation, insurance and real estate, are now open to foreign direct investment.
"India has also made better use of invested capital than China. China's investment as a share of GDP is twice that of India, but its GDP growth rate has been only 50 percent higher. Rising domestic investment is likely to lift India's trend GDP growth rate above seven per cent for some time," Wilson added.