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India dislodges Japan as 3rd largest global economy
May 30, 2013, 9:10 am


The report says GDP per capita should increase more than eight-fold in India by 2020 [AP]

In what can be seen as a major vindication of the slew of recent reforms unleashed by India, the OECD has asserted that the Indian economy is likely to have surpassed Japan to be the third largest economy globally.

“India has probably recently surpassed Japan to be the third largest,” said the OECD’s twice yearly report on Thursday.

The OECD (Organisation for Economic Cooperation and Development) is a 34-member country organisation that does not include the BRICS.

The OECD report also said between now and 2060, GDP per capita is seen to increase more than eight-fold in India and six fold in China.

India’s inflation is expected to decline further as the effects of poor weather on food prices and hikes in administered prices fade.

Welcoming the fiscal tightening and the new fiscal consolidation roadmap, the report cautioned that monetary policy in India should be eased further.

“Energy subsidies remain high and should be cut. The tax system should also be reformed to raise more revenue in a less distortive way so as to boost private investment and competitiveness,” the report said.

“In particular, the long-awaited reform of indirect taxes should be implemented swiftly. However, structural bottlenecks continue to constrain both investment and growth potential and addressing them is the key to boosting growth and raising living standards,” it said.

The report also reiterated that China’s growth juggernaut will continue as it supersedes the United States.

“China will likely pass the US as the world’s largest economy in the next few years,” said the forecast.

The BRICS Post