India poised to be world's third largest economy

New York: As India's investment climate seems to be improving, the moment might not be far away for the country to emerge as the world's third economy, says Jim O'Neill who is better known for coining the acronym BRIC. "It is probably too early to say with certainty that India will soon take its place as the world's third largest economy, behind China and the United States. But, given that India's investment climate seems to be improving, that moment might not be too far away," he said in a recent commentary posted on Project Syndicate website.        

"By 2017, India could surpass Italy and Brazil to become the world's seventh largest economy; by 2020, there is a reasonable chance that it will overtake France and the United Kingdom to become the fifth largest," O'Neill, who was recently in India, said. Way back in 2001, O'Neill, had coined the acronym BRIC - the grouping of Brazil, Russia, India and China, while mentioning about growth prospects in large emerging markets.   O'Neill, a former chairman of Goldman Sachs Asset Management, is now a Honorary Professor of Economics at Manchester University and Chairman of the Review on Antimicrobial Resistance, among other roles.        

He said that a key feature of his research into the BRIC  economies over ten years ago was that at some point during this decade, India would start to grow faster than China and continue to do so for dozens of years. "The reasoning is straightforward. India's demographics are considerably better than China's, and the size and growth rate of a country's workforce is one of the two key factors that drive long-term economic performance the other being  productivity.        

"Between now and 2030, the growth rate of India's workforce will add as much to the existing stock of labour as continental Europe's four largest economies put together," he said. According to him, India is less urbanised than China, and  it is in the early stages of benefiting from the virtuous forces that normally accompany that process. However, he cautioned that when it comes to productivity, India has been a laggard.         

"Unless it finds a way to improve, the country's demographic profile could become a burden rather than a benefit," he added.