The Indian economy, whose size is USD 2 trillion as of now, is poised to overtake the combined GDP of Japan and Germany in the next four years on the back of recent policy reforms and improved business confidence in the country, IMF chief Christine Lagarde said today.
“Indeed, a brighter future is being forged right before your eyes. By 2019, the economy will more than double in size compared to 2009. When adjusting for differences in purchase prices between economies, India’s GDP will exceed that of Japan and Germany combined,” the IMF Managing Director said at a lecture here.
“Indian output will also exceed the combined output of the three next largest emerging market economies Russia, Brazil, and Indonesia. So clearly India’s weight among the group of emerging markets will increase,” she said.
“Recent policy reforms and improved business confidence have provided a booster shot to economic activity,” she said.
Using India’s new GDP series, the IMF expects growth to pick up to 7.2 per cent this fiscal year and accelerate further to 7.5 percent next year making India the fastest growing large economy in the world, she added.
Asked if the International Monetary Fund (IMF) believes new series of data, she said “conditionally”.
On whether the multilateral funding agency has sought for some explanation on how the new series have been arrived at she merely said, “yes”.
Elaborating on reasons for rapid economic expansion, she said much of this has to do with population growth.
“More than 50 per cent of India’s population is at present below the age of 25, and more than 12 million people enter the labour market every year,” she said.
By 2030, Lagarde said India is expected to have the largest labour force in the world.
At more than one billion people of working age, India’s labour force will be larger than the combined labour force in the United States, the euro area, and Indonesia, she added.
“The potential benefits to be reaped from your collective work efforts could be enormous. So, we know India can run- judging by your cricket record. I believe India can fly,” she said.
As India grows and takes its rightful place in the global economy, the focus should remain on sound policies and inclusive institutions, she said.