Citi group says India is expected to become the world's largest economy by 2050.

The report predicts India will surpass the US to become the second largest by 2040, and then overtake China by 2050.

The estimates are based on purchasing power parity, an economic growth indicator that takes into account the purchasing power, of each country's currency, instead of the prevailing exchange rate conversion.

But Citi also emphasizes that a number of major changes within a relatively short time are required for India to meet future challenges.

India's infrastructure has to improve and further deregulation of the domestic economy and trade liberalization are required.