Tokyo, May 28:

India’s economy will overtake the Japanese economy by 2025 to rank third in the world after the US and China in terms of purchasing power parity, Japan’s central bank chief predicted today.

Bank of Japan (BoJ) governor Toshihiko Fukui also urged India to loosen restrictions on capital flows and develop domestic bond markets so as to further integrate itself into the global economy.

“Everyone recognises the large and varied influence India is having on the world,” he said. “If we extend the current growth rate, India’s purchasing power parity will exceed that of Japan by around 2025 and will rank third after the US and China.”

Fukui also pressed India to minimise environmental damage and take steps to boost energy efficiency to help curb high energy prices. India is expected to report on Thursday that its economy expanded at a record 9.2 per cent in the past financial year despite a series of monetary tightening measures by the central bank to cool inflation, analysts say.

Meanwhile, the first rain from India’s annual monsoon, which is crucial to its farm-dependent economy, hit the southwest coast today, weather official said.

“The onset of the annual southwest monsoon has begun over Kerala today,” said K Santosh, director of the Indian meteorological department’s office in Thiruvananthapuram, the capital of Kerala state. A monsoon season, which lasts from June to September, is considered normal if the rains equal 98 per cent to 102 per cent of the annual average. This year the rainfall is expected to reach about 95 per cent. The season accounts for about 80 per cent of India’s annual rainfall, vital for the farm economy, which lacks adequate irrigation facilities.