MUMBAI: India is likely to overtake Japan and Germany to become the third largest economy in the next 10 years but needs to be consistent in reforms and focus more on the social sector, British brokerage HSBC has said.Social capital is "insufficient" in the country and spending on aspects like health and education "is not just desirable for its (India's) own sake, but is also central to economic growth and political stability", it said.India also needs a lot of focus on ease of doing business and related aspects like contract enforcements. "In over the next ten years, India will likely surpass Germany and Japan to become the world's third largest economy in nominal USD and the transition will happen even more quickly on a PPP (purchasing power parity) basis," its economists said in a note.Demographics and macro stability were pointed out as key strengths for the country by the brokerage.Its estimates show India will be a USD 7 trillion economy in 2028, as compared to less than USD 6 trillion and USD 5 trillion for Germany and Japan, respectively.Presently, India's GDP is around USD 2.3 trillion (fiscal 2016-17). It stands at the fifth spot in global rankings.The brokerage said the growth rate, which will be lower in FY18 as compared to the year-ago's 7.1 per cent due to the introduction of Goods and Services Tax (GST), will recover from next year in a sustainable fashion.It also made a case against "stray reforms", terming them as "harmful". "There are limits to one-off reforms. "It (India) needs to broaden its specialisation (beyond just IT in business and cricket in sports) if it wants to run harder and fly higher," it said.

Source: Economic Times September 17, 2017 06:45 UTC