India may beat China as key to global growth by 2028: Bloomberg

India could surpass China as the defining force of global growth by the year 2028 and the factor driving the feat would be India’s stature as the most populous nation in the world, with a population of 1.4-billion.

India’s superiority in terms of Purchasing Power Parity (PPP) would gradually tilt the scales in the nation’s favour by 2028, according to a Bloomberg Economics analysis. Put simply, PPP is a measure that compares living standards and economic growth of countries by adjusting differences in expenses of commodities and services, thereby comparing the absolute purchasing power of currencies of the respective countries.

The analysis noted that India’s economic success is largely dependent on the government working towards a better infrastructure, growing participation of the country’s workforce and cutting down on red tape. India’s labour force participation rate, which is calculated as a country’s labour force divided by its total working-age population, enjoys among the lowest ratios in the world, according to the International Labour Organization. In 2022. India’s labour force participation rate was 55.4 per cent, compared to China’s rate of 76 per cent.

The report showed that the $17.8-trillion Chinese economy was yet to wholly recover from Covid-19 pandemic pangs. The shifting stance of the United States and other developed countries in the West on conducting trade with China has also added to economic pressure on the Asian nation. The West, the report noted, increasingly looked at China as a competitor than a business partner. While China’s economic growth stood at 5.2 per cent in 2023, it could dwindle to 3.5 per cent by 2029. Also, many countries have shifted production units to India from China in recent years, the analysis noted.

India, the report stated, is on the other hand among the world’s most rapidly growing economies, with its electronics and aviation industries at the forefront. According to Bloomberg’s base case evaluation, India’s growth would happen at 9 per cent by the decade-end from around 7.6 per cent, where it currently stands at the end of the last fiscal year.

While an estimated 48.6 million medium-skilled workers would retire in China and several other developed nations by 2040, India would add 38.7 million workers in the same category during that period, the report said.

India presently ranks at number five among the largest economies of the world, after the US, China, Japan and Germany. Prime Minister Narendra Modi, seeking to return to office for a third term in the upcoming general elections of 2024, has asserted his government’s intention to take Indian economy to the “top position” globally.