India to become 3rd largest economy by 2012

A report by PricewaterhouseCoopers (PwC) shows India can overtake Japan as the world’s third largest economy by purchasing power parity (PPP) by 2012.

India’s economy expanded 7.9 % in the second quarter of 2009-10 and is expected to grow over 7 % in the whole fiscal hear, posits the global accounting firm. According to the key policy makers of Prime Minister Manmohan Singh’s government, India will return to a 9% growth trajectory in two or three years.

The effects of the global financial crisis on India and China were largely limited; both countries returned to high growth rates in 2009 while Western economic giants are still facing slow growth and unemployment.

Additionally, India is expected to grow faster than China after 2020. China, which was projected to become the world’s largest economy by 2041, now looks set to achieve the distinction sometime around 2020, the PwC report said.

”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,” writes PwC head of macroeconomics, John Hawksworth, in the report.

The report, released Friday by PwC, the largest of the world’s Big Four auditing firms, projected that China will overtake the US to become the world’s largest economy by 2020, more than 20 years ahead of the earlier prediction of 2041.

It is also predicted that China’s share in global GDP will be 19% by 2030, while the proportion for the US and the EU will be 16% and 15%, respectively.