India to surpass China in share of global GDP by 2060: World Inequality Lab

Why in News?

According to the World Inequality Lab report titled Global Justice Report: A Plan for Equality and Prosperity With Planetary Boundaries, India is projected to surpass China in its share of global GDP measured in Purchasing Power Parity (PPP) terms around 2060.

Key Findings

• China’s share of global GDP is currently about 20% in PPP terms, higher than that of the United States.
• China’s population share is projected to decline significantly:
  • 23% of world population in 1945.
  • About 17% in 2025.
  • Less than 8% by 2100.
• As a result, China’s share in world GDP is expected to stabilize and decline in the second half of the 21st century.
• India is projected to overtake China in PPP-based global GDP share around 2060.
• The report suggests that the 21st century will be characterized by a multipolar global economy, unlike the dominance of a few powers in the 19th and 20th centuries.

About World Inequality Lab (WIL)

• A research laboratory based at the Paris School of Economics.
• Focuses on studying global economic inequality, wealth distribution, and development trends.

What is Purchasing Power Parity (PPP)?

• PPP is a method used to compare the economic output and living standards of different countries.
• It measures how much of a country’s currency is needed to purchase the same basket of goods and services that another country’s currency can buy.
• PPP-adjusted GDP reflects the real purchasing power of economies by accounting for differences in price levels across countries.

Significance of PPP

• Provides a more accurate comparison of economic size than market exchange rates.
• Widely used by international organizations such as the World Bank, International Monetary Fund, and Organisation for Economic Co-operation and Development.
• Useful for comparing living standards and economic productivity across nations.

Source: ET