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India to outsmart Japan in 2006

If projections by a US asset management firm hold good, India will ?equal or surpass? Japan this year and emerge as the world?s third largest economy after the United States and China.

india Updated: Jan 26, 2006 13:04 IST

If projections by a US asset management firm hold good, India will “equal or surpass” Japan this year and emerge as the world’s third largest economy after the United States and China.

A study just released by Keystone India’s chief economist William T. Wilson says that India’s economy, measured in terms of purchasing power parity (PPP), will eclipse the $ 4 trillion mark in 2006, making it equal to or greater than Japan’s.

“The results of liberalising (India’s) strategic sectors such as telecom, banking, aviation and real estate are now beginning to show,” says Wilson, who is a former chief economist of E&Y. Pointing to estimates that the Indian economy will grow at 7.8%this fiscal, the study says this growth rate will boost salaries by an inflation-adjusted 7%this year. “The mobile telecom market in India, the fastest growing in the world, is growing at over 2 million subscribers per month. Motor vehicles’ sales, which surpassed the one million mark last year, are expected to continue registering double-digit growth over the next few years. The housing market, expanding at a 10-15% annual clip, is expected to remain robust in 2006,” it notes.

The study points to the hurdles that lie ahead. It reckons that outcome of state elections in 2006 will play a significant role in determining the health of the coalition government at the Centre. Another imponderable will be higher energy prices, which will be particularly acute for a country like India that imports 70 per cent of its petroleum.

PricewaterhouseCoopers has released findings of a survey of 1,400 CEOs, saying that 71 per cent of the chief executives have spoken of their intention to expand business in India, China, Russia and Brazil during the next three years.

First Published: Jan 26, 2006 03:25 IST