India is expected to become the world's third largest economy this year after the United States and China, a leading economist in the US said on Tuesday.
Dr William T Wilson, chief economist for Keystone India, a Chicago-based firm providing cross-border trade facilitation and asset management services in the US and India, said after significant accelerations in economic growth recently, India's economy is expected to equal or surpass Japan as the world's third largest sometime in 2006.
"The results of liberalising strategic sectors such as telecom, banking, aviation and real estate are now beginning to show," Wilson, a former chief economist for Ernst & Young, said.
Wilson said India's economy measured in PPP (purchasing power parity) terms will eclipse the $4 trillion mark in 2006, making it equal to or greater than Japan's.
Wilson noted that after growing at 8.5 per cent and 6.9 per cent in 2003 and 2004 respectively, India's economy is expected to grow 7.8 per cent in 2005-2006 and then decelerate modestly to seven per cent in 2006-2007.
"Depending upon the direction of energy prices, inflation is expected to run between 5 and 5.5 per cent range in 2006."
Wilson, however, acknowledged that a number of hurdles lie ahead for the Indian economy, including higher energy prices and heavy dependence on petroleum imports.