China is Asia's 800-pound gorilla. But another Asian giant is home to the world's fastest-growing large economy: India. And as India's economy grows, it will be getting more attention, especially when it comes to the tech revolution currently underway there.
As a reminder: India has the world's second-largest population and and now has the world's seventh-biggest economy. Its economy was about the same size as Brazil's in 2015 (and has now surpassed it), and is larger than Russia's.
Overall, India is still very poor, though. Even though it has a $2 trillion economy, it ranked 145th in the world last year based on per capita GDP.
But extreme poverty in India has dropped sharply. According to consultants McKinsey & Company, in 1994, 45% of India's people lived in extreme poverty. By 2012, that number had dropped to 22%, or 270 million people.
But that's just extreme poverty. McKinsey also measured how many Indians were too poor to meet "minimum acceptable living standards." These include basic levels of nutrition, water, sanitation, energy, housing, education and health care. McKinsey estimates that 56% of India's population (that's 680 million people) can't afford even these minimum living standards.
India's Forecast Economic Growth
Over the next five years, it's projected that India's economy will grow faster than any other large economy. This rapid growth should slowly help to take care of India's high levels of poverty.
To help give some context to India's economic growth and size, McKinsey also compared the GDP of certain countries in 2014 with the projected size of India's largest cities' economies in 2030. Based on current estimates, by 2030 the third-largest city in India, Delhi, will have an economy the size of the Philippines' economy in 2014. By 2030, Mumbai's economy will equal the size of Malaysia's economy of two years ago. And the western Indian city of Ahmedabad will have an economy as large as Vietnam's was in 2014.
Explosive Growth Coming for India's Technology Sector
Technology is set to lead India's economic growth story. There are already more than 1 billion cell phone users in India. With 462 million users, it also has the world's second-largest online population (after China). These huge numbers of mobile and internet users are laying the foundation for explosive growth in mobile internet, digital payments, cloud computing and the internet of things, among other technologies.
When it comes to India and China, it can be hard to wrap your head around the numbers because they're so big. For instance, 10 billion appliances, mobile phones and tablets connected over the internet -- in a single country -- is a hard number to grasp. But it's very big.
If these technologies are adopted as predicted, they will have a major impact on India's economy. According to McKinsey, they could add $500 billion to $1 trillion to the economy each year by 2025. That would equal 20% to 30% of India's incremental economic growth from 2012 to 2025.
India still has to overcome some enormous challenges before joining the world's economic big leagues. So, even though it has great long-term growth prospects, it will be a bumpy road and may not be the best investment for everyone's portfolio right now.
But when it comes to investing, if you get the big picture right, it helps a lot. And the long-term outlook for India is very bright right now.
Investors interested in an easy way to gain access to India's economy should consider the iShares MSCI India ETF (INDA) - Get Report. This exchange-traded fund has a market capitalization of $3.66 billion.
Kim Iskyan is the founder of Truewealth Publishing, an independent investment research company based in Singapore. Click here to sign up to receive the Truewealth Asian Investment Daily in your inbox every day, for free.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.