India is likely to become the third largest economy in the next 10 years. That’s old news. India is also likely to overtake Japan in nominal GDP by 2028, a report by BofA Merrill Lynch Global Research estimated. India, according to the report, stands out among the large emerging economies as most likely to achieve strong growth over the next decade.“In 2028, we estimate it will overtake Japan in nominal GDP to emerge as the world’s third-largest economy. At the same time, various structural factors will likely weigh on growth in China, Brazil and Russia. Here we take a big-picture look at India’s prospects,” the report co-authored by Indranil Sen Gupta and Aastha Gudwani said.For India’s growth over the next decade, BofA Merrill Lynch Global Research has said that there are three major drivers: Rise in saving and investment rate, financial liberalisation, and the emergence of the mass market. The report estimates India’s GDP will grow at 7%.Rising saving and investment rates, driven by falling dependency ratios, should fund our estimated 7% real growth report said. “The dependency ratio is slated to fall to about 47% in 10 years from 52.2% at present. This should sustain a saving rate of at least 32% of GDP, similar to the average in 2000-17. In turn, the investment rate should rise to 35% from 32.4% in 2000-17 and 22.1% in 1980-1990s,” the report added.The analysis is based on the growth of a skilled labour force, immigration from more populous to more industrialized states, and rising political accountability with a deepening of democracy to the grassroots level.The financial allocation of rising saving rates should be supported by growing financial maturity. ?The credit to GDP ratio, a proxy for financial maturity, will likely climb to 83% of GDP from 44% (2001-17) and 25% during 1980-90s driven by three factors: financial extension and inclusion, the emergence of financial products, and financial market development. This, in turn, pulls the interest rate structure lower. The share of loans, advanced at lending rates of 14+%, has fallen to 9% of the total from 64% in 2000.Tying it all together, the report says, the emergence of mass markets powered by rising incomes, on the demand side, as well as economies of scale, on the supply side. A virtuous cycle is seeing higher affordability, as incomes rise, which allows manufacturers to hold the price line on economies of scale; this, in turn, reinforces affordability. The report estimates that an entry-level car will cost 1 times per capita by 2028 from 2.5 times now, and 14 times in 2000.Moreover, India’s growth will be driven by services. It has climbed by 10% to almost 70% of world GDP in the past 20 years. Not surprisingly, they have also emerged as a key driver of India’s growth as well. A natural corollary is that the impact of Indian growth on global markets will likely be driven by higher demand for commodities rather than manufacturing exports, the report said.