WASHINGTON -- India is poised to become the world's third-richest economy within 15 years, doubling the wealth per head of its 1.1 billion people, according to a new study by the prestigious research team of Deutsche Bank, Germany's largest finance group.

The report comes as Prime Minister Manmohan Singh announced Thursday India was committed to remain an open economy and an open society, benefiting from a "brain gain" rather than losing talent in a brain drain of well-educated young Indian professionals going abroad to seek their fortunes.

India's future depended on an embrace of globalizing forces, and a readiness to welcome foreign investment and foreign trade, Singh maintained, signaling his commitment to rallying his traditionally left-of-center Congress Party behind free trade and free-market reforms.

"We should be more open to global capital flows and better prepared to take advantage of new markets for goods and services. India is wholly committed to multilateralism in trade but we will seek the reform and democratization of multilateral institutions," Singh wrote. "As a developing economy we must tap international resources to fuel our development."

The Deutsche Bank report, titled "India Rising; a medium-term perspective" estimates that India could sustain a 6 percent annual economic growth rate for the next 10-15 years, and with aggressive policies that rate could be as high as 8 percent a year. The report says India's growth rate will surge beyond that of the current star performer, China, and is likely to push China into third pace -- behind Malaysia -- in the world growth leagues.

"Favorable demographics, increasing investment in education and infrastructure and further integration with the world economy are the factors behind our projections," the report says. "Indian will thus become the fastest growing economy out of 34 developed and emerging markets and the world's 3rd largest economy by 2020. Gross Domestic Product per capita will double from roughly $2,500 today at purchasing power parity to almost $5,000 in 2020."

The Deutsche Bank survey lists implications of this rate of growth, including the emergence of a much larger and wealthier internal market, changing consumption patterns with more spending on health care, transport and communications.

Internal investment is also likely to rise fast, thanks to demography. With 33 percent of the population now below the age of 16, India will have a large and fast-growing work force over the next few decades, mostly entering the savings phase of their life cycle and looking for ways to invest their savings and their pension accounts. Over the next 15 years, India is expected to add some 250 million adults to its labor pool, or more than 15 million new workers a year.

Many of them will be highly trained. India currently has 3,800 universities and 1,500 research institutions, which graduate some 200,000 engineers, 300,000 non-engineering technicians and 9,000 people with doctoral degrees a year. The reports notes the Institute of Management Development's 2004 report on global competitiveness ranked India as No. 1 in the world in engineering capabilities and No. 2, behind Denmark, in availability of skilled labor.

But India faces three main problems. First, it remains in some ways a closed and rather old-fashioned economy, with trade accounting for less than 20 percent of GDP, compared to 50 percent in China, and close to 100 percent in Thailand. India's tariffs remain unusually high, averaging close to 20 percent on imported goods (though dropping fast under the latest budget).

Second, and partly because of that tradition of a centrally planned, controlled and thus semi-closed economy, foreign direct investment remains low, averaging some $3 billion a year in recent years (less than half of 1 percent of GDP) compared to an annual average of $45 billion, or 4 percent of GDP, for China.

Third, poor economic management by the government has saddled India with a high and constant budget deficit, stubbornly persisting at the high level of 10 percent of GDP annually. This squeezes out private investment, keeps interest rates higher than they should be, which eats into growth, and Deutsche Bank calls the deficit "the Achilles heel." Worse still, while the deficits used to fund productive investment in the form of public spending on infrastructure, the deficits are increasingly being used to fund government operations, and to pay the interest on the rising levels of national debt.

"India's poor public finances have placed significant constraints on growth," the report says.

That underlines the significance of Singh's new commitment to reform. His government is already pledged to balance the budget by 2009, and the introduction this year of a Value Added Tax should help ease the budget problem. But there are severe political problems from some of Singh's left-wing partners in the government coalition, as well as endemic problems of over-regulation and red tape. It take 85 days to start a new business in India, compared to 8 days in Singapore.

Ironically, one area where Deutsche Bank sees real promise of growth lies in the rural poor, traditionally seen as a drag on India's economic prospects. Agriculture employs 60 percent of the labor force, but produces only 23 percent of GDP. This could be dramatically improved, says Deutsche Bank, if investment in irrigation and rural infrastructure could free Indian agriculture from the vagaries of the monsoon and provide the labor force for manufacturing industry to buttress India's strengths in the high-tech and service sectors.

"India's growth potential over the next 10-15 years sets the country at the forefront of the developed and developing world," says Deutsche Bank, in one of the most favorable reports it has published on the prospects for any national economy. But much will depend on Prime Minister Singh's ability to fulfill his promises of reform.