Indian economy's size more than half of US in PPP term:NITI Aayog VC

India’s economy has reached a significant milestone, with its size in purchasing power parity (PPP) terms standing at $15 trillion—more than half of the $29 trillion size of the United States economy, NITI Aayog Vice-Chairman Suman Bery, while addressing the Annual Business Summit 2025 organized by the Confederation of Indian Industry (CII), Bery underscored the importance of measuring economic productivity through PPP, which offers a more accurate comparison of real output and living standards across countries. “There has been a lot in the newspapers about our being the fourth largest economy. Those are all measured at market prices, but the real way of measuring productivity is purchasing power parity,” Bery stated. “While we are a $4 trillion GDP at market prices, in PPP terms, we are a $15 trillion economy,” he added.
PPP measures the relative purchasing power of different currencies by comparing the cost of a standard basket of goods and services. It is widely used by economists to evaluate and compare the real size of economies and assess labour productivity across countries. Bery noted that India's labour productivity remains the lowest among G20 countries. “Our problem is our low level of labour productivity, not only with respect to the US but also compared to our peers like China and ASEAN countries,” he said. Highlighting that rising labour productivity is vital for increasing real incomes and reducing the overdependence on government jobs, he emphasized the need to address this gap to meet the aspirations of India’s young population.
On structural reforms, Bery stressed the importance of diversifying supply chains and reducing dependence on any single supplier. He also urged policymakers and businesses to “leverage global knowledge and innovate locally,” while continuing efforts to reform markets and build human capital. He also called on state governments to actively engage in and capitalize on Free Trade Agreements (FTAs) signed by the Centre, emphasizing that competitiveness must extend beyond manufacturing to include services. “States should seize opportunities created by these FTAs and expand India’s footprint in global value chains,” Bery said.
Reflecting on India's economic journey, Bery observed that the country has posted an average annual growth rate of 6.5% over the three decades since the 1991 liberalisation reforms up to the pre-COVID period. “The roots of resilience in India lie as much in our institutions as they do in our policies. But we mustn’t be complacent; we need to up our game for all kinds of reasons,” he said. On the path to industrialisation, Bery pointed out that while India can draw policy lessons from nations like China, Japan, and South Korea, it must chart its own course based on domestic realities and productivity imperatives.

(Business Correspondent)