The India Century: Keystone Predicts India Will Be the World's Third Largest Economy by 2030

CHICAGO, May 31, 2005 -- India's economy will surpass Japan's to become the world's third largest economy, behind the United States and China, within 25 years, according to a research report released by William T. Wilson, Ph.D., Chief Economist for Keystone India and one of the leading economists in the United States. Keystone facilitates the flow of trade and investment between the United States and India.

"Demographics and economic reform are driving India's growth," Dr. Wilson says. "With half the population under the age of twenty-five, India will have the youngest labor force in the world, and its population is expected to exceed China's by 2030. India's working age population is expected to grow continuously over the next 40 years. At the same time, China is aging faster than any other country in history, largely due to its one child policy.

"India's economic reforms, which formerly were driven by responses to crises, are now driven by policy," according to Dr. Wilson. "Several key sectors, including pharmaceuticals, power, telecommunications, civil aviation, insurance and real estate, are now open to foreign direct investment. Many other positive steps have been taken, such as recognizing product patents on drugs, lessening of bureaucratic controls and the recent announcement by the main opposition party that they will support ongoing reforms."

"India has also made better use of invested capital than China. China's investment as a share of GDP is twice that of India, but its GDP growth rate has been only 50 percent higher. Rising domestic investment is likely to lift India's trend GDP growth rate above 7 percent for some time," concludes Dr. Wilson.

The research paper, The India Century, examines and projects India's economic growth potential over the next half century using the latest data on demographic changes and policy reforms. He also cites risk factors which bear watching.

For a copy of The India Century or to talk with Dr. Wilson, contact him at william.wilson@keystone-india.com or 312-943-7764 or Mita Ghosh, Director of Marketing, at mita.ghosh@keystone-india.com or 312-399-7073.

Keystone India provides cross border deal facilitation, consulting and asset management services to clients in the U.S. and India. Dr. Wilson has worked with the media for fifteen years. He was formerly Chief Economist at Ernst & Young LLP. Access his profile at www.keystone-india.com.