India could become the world’s second-largest economy by 2038, according to a new report by EY. The report says India’s strong economic base, young population, and good financial management will keep the country growing, even when the global economy faces problems.

The report, called EY Economy Watch, says that if India continues its current growth, its GDP in PPP terms could reach $34.2 trillion by 2038, making it the second-biggest economy after China.

Why is India growing so well?

1. Young population: By 2025, the average age in India will be just 28.8 years. This means most people will be in the working age group, giving the economy a strong push.

2. High savings: India has the second-highest savings rate among big economies. This allows more money to be invested in industries, infrastructure, and new businesses.

3. Lower debt: Unlike many countries, India’s government borrowing is reducing. The debt-to-GDP ratio is expected to fall from 81% in 2024 to about 75% in 2030.

4. Strong domestic demand: India’s economy doesn’t depend too much on exports. Its huge internal market ensures growth even if global trade slows down.

What about other countries?

The report says other large economies are facing challenges. China’s population is ageing fast, the US has very high debt, and countries like Germany and Japan rely heavily on global trade and also have older populations. These factors make their future growth more difficult compared to India.

India’s future

EY’s Chief Policy Advisor, DK Srivastava, said India’s strengths will help it stay on track to becoming a developed country by 2047 under the vision of Viksit Bharat.

India is also expected to overtake Germany and become the third-largest economy in market exchange rate terms by 2028. Even possible setbacks, such as US tariffs, are not likely to slow growth because India can rely on export diversification and strong local demand.

In short, India’s young people, rising domestic consumption, responsible financial planning, and ongoing reforms make it one of the most promising economies for the future.