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India, along with Russia, China, Indonesia and Brazil, is likely to emerge as a key player in the world economy over the next 25 years, fundamentally changing the way the world does business, says a new World Bank study.

The document, released in Washington on Monday, says these emerging ''Big Five,'' which now account for half of the world's labour force but only eight to nine per cent of its GDP or international trade, are likely to redraw the economic map of the world.

Given continued policy reforms and the strengthening of an open world trade and investment regime, it points out, these figures could double by 2020, with substantial repercussions for global resource allocation, production, trade and pricing.

The report, 'Global Economic Prospects and the Developing Countries 1997', forecasts an annual growth of five to six per cent between now and 2020, raising their share of world output from around one-sixth to approaching a third over the same period.

It says the developing countries' growth in 1996 was the highest so far in this decade, an estimated 4.5 per cent including transition economies. Excluding these economies, the growth was 5.6 per cent, the most rapid rate in 20 years.

In sub-Saharan Africa, growth has run at about four per cent for two years, over two percentage points higher than the trend in the preceding decade, while in India, it was nearly seven per cent for three years running.

The report notes that the integration of developing countries in the world economy has gained ground.

Last year, private capital flows to developing countries surged to a record 245 billion dollars . Their trade volume expanded at a robust pace of close to seven per cent despite a downturn in overall world trade growth.

It says the current Big Five share of world trade is early a third of the European Union. By 2020, it could surge to 50 per cent higher than that of the EU.

The report estimates that greater liberalisation and faster growth in the Big Five will have substantial net benefits for most countries and regions in the world.

World Bank Senior Vice President and Chief Economist Joseph E Stiglitz, who released the report, warned about the transition costs but said ''there is little evidence to justify two of the most common fears -- downward pressure on unskilled wage in industrial and developing nations, and higher prices for food and energy."

Dealing with the economic situation in South Asia, it says the the momentum of economic reforms is being maintained despite. political flux and is evoking a robust supply response.

It notes that the Indian economy averaged six to seven per cent growth in 1994-96 and stabilisation and reform measures, introduced in 1991, have removed entry barriers, increased domestic competition and significantly liberalised the trade and foreign investment regimes to some extent.

It says that the 1997-98 budget had cut the average import-weighted tariff to 20 per cent, with further reductions to come, but reductions in corporate and personal tax rates in the budget were unexpectedly large.

It, however, says big challenges remain central. Among them is reducing a fiscal deficit running around five per cent of the GDP in the past few years which, among other diverse and pervasive ill-effects, hampers investment from being raised to 30 per cent plus rate prevalent in East Asia.

It says inadequate private sector provision, lack of competition and poor regulation contribute to severe shortages of infrastructure and low service sector productivity in many areas, seriously constraining potential growth.

The report says such reductions in the budget deficit as there have been over the past five years have largely been achieved at the expense of infrastructure and other investment spending.

Overregulation of agriculture and agro-industry continue to constrain opportunities in rural areas, where most people, especially the poor, live, it adds.

Meanwhile, the International Monetary Fund wants India to go in for an accelerated trade liberalisation, including the early phasing-out of quantitative restrictions on imports of consumer goods.

The suggestion is contained in the annual report of the IMF which was released in Washington on Monday. After bilateral consultations with the Indian government, it says, IMF directors have made several such suggestions.

These included further efforts to strengthen public sector banks and to ensure effective supervision, more ambitious public enterprise reform, including privatisation and implementation of an effective exit policy, and action to establish a framework for private participation in infrastructure.

While welcoming the new government's reform programme, they emphasised that early elaboration of a comprehensive framework of structural reforms and bold initial action would help foster an efficient and dynamic private sector response.

The directors stressed that monetary policy should be firmly focused on inflation and cautioned against undue easing of monetary conditions.

The authorities should phase out ad hoc financing from the Reserve Bank of India to the government at the end of the fiscal year as an important step in building the framework for greater central bank independence, the report said.

The IMF annual report says that directors emphasised the need for flexible exchange rate management in close coordination with other macroeconomic policy instruments.

They stressed that the exchange rate should be allowed to respond to market signals and that, in managing intervention policy, the authorities should avoid a too mechanical reliance on indicators of the real exchange rate.

They also pointed to the considerable efficiency gains from freer capital flows.

According to the report, a number of directors considered that more could be done to open up the Indian economy to foreign investment and urged that priority be given to removing the remaining obstacles to foreign direct and portfolio investment.