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Last Updated: Wednesday, 24 January 2007, 11:48 GMT
Indian economy 'to overtake UK'
By Damian Grammaticas
BBC News, Delhi

GM India plant at Halol
Manufacturing has helped to drive India's economy
India could overtake Britain and have the world's fifth largest economy within a decade as the country's growth accelerates, a new report says.

If trends continue, India's economy may then surpass the US and be second only to China's by mid-century, the report by investment bank Goldman Sachs says.

The report says India's programme of reforms has brought increased competition and efficiency.

But there will be a heavy cost as India demands more and more energy.

Boom time

Everywhere you turn in India's cities are signs of economic boom.

The implications of projections are that India will overtake the G6 economies faster than envisaged
Goldman Sachs report

New cars choking the streets, middle-class housing and shopping malls swallowing up farmland, airports chock-a-block with travellers.

But this is probably only the start of a transformation that will reshape the global economy.

Within a decade India can overtake Italy, France and the UK to become the world's fifth largest economy if it keeps up its current pace of expansion, according to analysts at Goldman Sachs.

India has shifted into a higher gear, they believe, because a decade of reforms have opened the country to greater competition, and spurred industries to become more efficient.

By 2050 India's economy could be larger even than America's, only China's will be bigger, the bank predicts.

The result will be huge demand from this new giant.

Within 15 years Indians should, on average, be four times richer than today, buying five times as many cars, and the country will burn three times as much crude oil to power its growth, putting yet more strain on the world's resources.


But India could also be held back.

The country's poor infrastructure is already struggling to keep up with growth, power cuts are common as there isn't enough electricity to meet current demand, ports are overflowing, many roads pot-holed and crumbling.

And a shortage of skilled workers may undermine the future expansion of India's much-vaunted IT industry.

However, other nations are increasingly waking up to the potentially vast market India holds. Last month the largest-ever American trade delegation to India spent two weeks searching out opportunities.

They were followed by a British group 150-strong led by the finance minister, Gordon Brown.

And the Russian President, Vladimir Putin, is to visit this week where he is pressing for major contracts providing nuclear power and defence equipment.

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