Report says that India will overtake US to become second-largest economy by 2075

In a recent report, investment bank Goldman Sachs has expressed its confidence in India’s growth trajectory, stating that the country has the potential to become the world’s second-largest economy by 2075, surpassing Japan, Germany, and the United States. The report attributes this growth to favorable demographics, innovation and technology, increased capital investment, and rising worker productivity. Currently, India ranks as the world’s fifth-largest economy, trailing behind Germany, Japan, China, and the US.

Goldman Sachs Research’s India economist, Santanu Sengupta, emphasized that India’s dependency ratio is expected to be among the lowest in the coming decades, indicating a favorable demographic advantage. Sengupta also highlighted India’s progress in innovation and technology, noting that demographics alone will not be the sole driver of GDP growth. The report emphasized the importance of innovation and increasing worker productivity in India’s economy.

The report underscored the Indian government’s focus on infrastructure development, particularly in areas such as roads and railways, as a catalyst for economic growth. It argued that the private sector should seize the opportunity to invest in manufacturing and services to generate more jobs and absorb the large labor force. However, the report identified a potential obstacle to India’s growth if the labor force participation rate does not increase as projected, especially for women who have a significantly lower labor force participation rate compared to men.

The report also addressed the impact of net exports on India’s growth, noting that service exports have helped cushion current account balances. Additionally, the report highlighted India’s demographic advantage, with nearly half of its population (650 million people) below the age of 25. This youthful population is projected to contribute to India’s growth until 2065.

Goldman Sachs’ optimistic outlook on India’s growth potential provides a boost of confidence for the Indian government, particularly at a time when the Foxconn-Vedanta semiconductor production facility deal has fallen through. The report reinforces the belief that India’s economic prospects are strong and that it has the potential to emerge as a major global player in the years to come.