India is likely to take over from China as a key driver of the explosive growth in global middle class over the next decade with a sharp increase in its contribution, says a report by Goldman Sachs.

"India will take over where China is leaving off, becoming the driver of middle class creation over the next decade. Its contribution to growth in the middle class will increase sharply and is unlikely to peak until around 2030," a global economic paper released by Goldman Sachs global chief economist Jim O' Neill stated.

At present, China and India are important parts of explosive growth in global middle class, but they differ significantly as the transition to the middle class is occurring earlier and faster in China than in India as incomes have risen sharply.

But, that is set to change as average incomes rise in China, the rate at which that country is adding to the middle class globally would probably peak in the next few years, though it would remain at high levels for at least another decade, the paper on 'The expanding middle class globally' added.

The middle class population in India, which is on the rise currently has expanded from 1 per cent in 2,000 to 5 per cent today.

"But if growth conditions along the lines of our projections eventuate, the vast majority of Indians could be in this group (middle class) by 2040," the paper said.

Meanwhile, India seems to be about 10 years behind China with percentage of people in the middle class increasing from 1 per cent at the beginning of 1990s to close 35 per cent today.

However according to Goldman Sachs projections, even without the two giants -- China and India --  growth in the middle class in the rest of the world could outstrip anything we have seen globally for decades, and could peak (at around 20 million per year) around the same time as India.

"Already by 2020, one-third of the new entrants to the world middle class would come from outside China and India.

And this percentage could reach half by 2030," O'Neill said in the paper.

The paper revealed that although we are in the middle of an unprecedented explosion in the 'world middle class', but the pace would pick up further and global income distribution is getting narrower, not wider.

"By 2030, two billion new people may join the world middle class. These shifts could be a significant influence on spending patterns, resource use, and environmental and political pressures," the paper projected.

Alongside the rise in the share of incomes going to the middle, an ongoing decline in the extreme poor with sharp reduction in poverty is most pronounced in China and India.

In fact, the Brazil Russia India China (BRIC) story has already been responsible for the largest declines in global poverty that we have ever seen, the paper revealed. In India, the trends are less spectacular than in China, but nonetheless more so than the world average.

Because of that the peak rates of poverty reduction globally may already be behind us, the paper noted.

Goldman Sachs has defined the middle class with incomes between $6,000-30,000 in 2007 in in PPP terms.