New Delhi: Indian economy is set to expand at the world's fastest rate over the next 50 years to emerge as a major force globally, but it would still rank as the second worst in terms of prosperity of its citizens.
Over the 50-year period between 2011-2060, India will register an annual economic growth rate of 4.9 percent, as per a latest report by Paris-based international grouping of the world's leading economies, the Organisation for Economic Cooperation and Development (OECD).
India's per-person GDP (measure of well-being of a country's citizens) will also grow more than 7-fold during this period, but the country will still rank at second place from the bottom by 2060 in absolute terms, said the report.
India was ranked lowest in terms of per-person GDP in 2011 and its position would change only marginally to second lowest after Indonesia in 2060, while China's position will improve considerably from third-worst to 16th from the down.
On the top, the US would be followed by Switzerland, Australia, Norway and Luxembourg. Switzerland is projected to be at the top in terms of well-being of its citizens.
As per the report titled 'Looking to 2060: Long-Term Global Growth Prospects', China would also grow significantly during this period with the third-highest growth rate after India and Indonesia.
"Income per capita in the poorest economies will more than quadruple by 2060, and China and India will experience more than a seven-fold increase, but living standards in these countries and some other emerging countries will still only be one-quarter to 60 percent of the level in the leading countries in 2060," OECD said.
"The extent of the catch-up (in terms of living standards) is more pronounced in China reflecting the momentum of particularly strong productivity growth and rising capital intensity over the last decade.
"This will bring China 25 percent above the current income level of the US, while income per capita in India will reach only around half the current US level," it added.
China would be on the top in terms of MFP (Multi-Factor Productivity that measures combined productivity of inputs into production) with a growth rate of 3.7 percent, followed by Indonesia's 3.2 percent and India's 3 percent.
The overall economic growth rate in China (3.9 percent) between 2011-2060 would be third-largest after India's 4.9 percent and Indonesia's 4.1 percent.
On the other hand, major economies like the US and the UK would witness growth rates of 2.1 percent and 2.0 percent respectively, OECD said.
China will have the highest growth rate until 2020, but it will be surpassed by India and Indonesia thereafter, OECD said.
"This partly reflects a more rapid decline in working-age population, and consequently in labour force participation, in China than in India and Indonesia," OECD said.
The annual human capital growth rate would be the highest in India at 0.8 percent for this period, as against 0.6 percent in case of China and 0.2 percent for the US and the UK.
OECD said that India economy is expected to be bigger than the US by 2060, while neighbouring China would emerge as the world's largest economy by as early as 2016.
"The United States is expected to cede its place as the world's largest economy to China, as early as 2016. India's GDP is also expected to pass that of the United States over the long term. Combined, the two Asian giants will soon surpass the collective economy of the G-7 nations," OECD said.
Currently, Indian economy is worth over USD 1 trillion.
As per OECD, the fast-ageing economic heavyweights, such as Japan and the Euro area, will gradually lose ground on the global GDP table to countries with a younger population such as Indonesia and Brazil.
"The next 50 years will see major changes in country shares in global GDP... China is projected to surpass the Euro Area in 2012 and the US in a few more years, to become the largest economy in the world, and India is about now surpassing Japan and is expected to surpass the Euro area in about 20 years.
"The faster growth rates of China and India imply that their combined GDP will exceed that of the major seven (G-7) economies by around 2025 and by 2060 it will be more than one-and-half times larger, whereas in 2010 China and India accounted for less than one half of G-7 GDP.
"Strikingly in 2060, the combined GDP of these two countries will be larger than that of entire OECD area, while it currently amounts to only one-third of it," OECD said.
In 2011, India accounted for 7 percent of global GDP, which is likely to grow to 11 percent by 2030 and then to 18 percent by 2060.
Still, the large cross-country differences in living standards will persist in 2060 and India's per capita income will only be about 25 percent of that in advanced countries, despite a robust growth.
OECD is a block of 34 countries, which includes many of the world's most advanced economies such as the US, Japan, UK, Germany, France, Australia and Netherlands.
First Published: Sunday, November 11, 2012, 12:33