Why India Could Replace China As The World’s Fastest-Rising Economic Power

Rather than one or two powers dominating the global economy, the world is heading toward a multipolar order where economic weight is spread more evenly across countries and regions.

The broader conclusion of the report is that the 21st century will look very different from the past two centuries.

Source : ABPLIVE AI

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• Report warns India about high inequality, low human capital.

India is on track to surpass China's share of global gross domestic product, measured in purchasing power parity terms, by 2060. This projection comes from a new report by researchers associated with the World Inequality Lab (WIL), a research laboratory based at the Paris School of Economics that studies inequality across the world.

According to PTI, the report, titled "Global Justice Report: A Plan for Equality and Prosperity With Planetary Boundaries," offers a sweeping look at how the world's economic weight will shift over the rest of this century.

China's Growth Story Has A Ceiling

China is currently a commanding force in the global economy. Its share of world GDP in PPP terms stands at roughly 20 per cent, which is about one-third higher than the United States. By 2035, the report projects China's economy to be twice the size of the US economy.

But beyond that point, the picture changes. China's population is shrinking fast relative to the rest of the world. It accounted for 23 per cent of the global population in 1945. That figure has dropped to about 17 per cent in 2025 and is expected to fall below 8 per cent by 2100.

As the population shrinks, so does China's share of global output. The report projects that China's GDP share will stabilise and then begin to decline in the second half of this century, at which point India is expected to take over.

The report also makes clear that China is unlikely to ever achieve the kind of dominance the US held around 1950, when it controlled between 35 and 40 per cent of the world's GDP, or what Europe commanded between 1900 and 1910, when it accounted for roughly 40 to 45 per cent of global output.

A Multipolar World Is Coming

The broader conclusion of the report is that the 21st century will look very different from the past two centuries. Rather than one or two powers dominating the global economy, the world is heading toward a multipolar order where economic weight is spread more evenly across countries and regions.

India's Challenge: Inequality and Productivity

While India's long-term trajectory looks promising, the report flags a significant concern. India has considerably higher inequality than China. It also lags behind China in productivity growth, which the report attributes in large part to China's larger and better-targeted spending on human capital, that is, investment in education, health, and skills development.

What PPP Means And Why It Matters

When economists compare the size of economies using purchasing power parity, they are not simply converting currencies at market exchange rates. PPP accounts for what a unit of currency can actually buy in a given country. The PPP between two countries measures how much of one country's currency is needed to purchase the same basket of goods and services that a set amount of the other country's currency can buy at home. This makes it a more accurate tool for comparing living standards and real economic output across countries.

Where India Stands Today

In nominal terms, India's economy is still catching up. According to the latest World Economic Outlook published by the International Monetary Fund, India's GDP is expected to reach $4.15 trillion in 2026, up from $3.92 trillion in 2025. The United Kingdom's GDP is projected at $4.27 trillion in the same year, marginally ahead of India, while Japan's economy is expected to contract slightly from $4.48 trillion in 2025 to $4.38 trillion in 2026.

The US remains the largest economy in nominal terms at $32.38 trillion, with China a distant second at $20.85 trillion.

The 2060 projection, therefore, refers specifically to GDP measured in PPP terms and not nominal dollar values, which remain a separate comparison altogether.

For India, the report offers a long-run endorsement of its economic potential but also a pointed reminder that high inequality and low human capital investment remain the two biggest structural obstacles standing between the present and that projected future.