The Economic Times

India to zoom past Japan in 2006 

January 25, 2006

Washington: India will become the world's third largest economy by equalling or surpassing Japan sometime this year — much earlier than previously projected — according to a new forecast.

Measured in purchasing power parity terms, the economy will eclipse the $4 trillion mark in 2006, making it equal to or greater than Japan’s , according to William T Wilson, chief economist of Keystone India.

Only the US and China will possess larger economies.

The Indian expansion is riding on “significant accelerations” in growth, especially the liberalisation in strategic sectors such as telecom, banking, aviation and real estate, Wilson said.

After growing at 8.5% and 6.9% in 2003 and 2004, the economy is expected to grow 7.5-8 % in 2005-06. And faster growth is expected to boost salaries by an inflation adjusted 7% this year, fuelling robust consumer spending.

India’s growth mostly comes from the areas of mobile telecom , where it is the fastest growing in the world (at over 2 million subscribers a month), and motor vehicles’ sales, which surpassed one million last year and are expected to continue registering double-digit growth over the next few years. The housing

market, expanding at 10-15 % annually, is expected to remain robust in 2006.

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