India to surpass United States as the world's second-largest economy by 2075: Report

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• Jul 11, 2023 | Dhupali Das

India will be the world's second-largest economy by 2075, surpassing Japan, Germany, and the United States...

Digital Desk: India will be the world's second-largest economy by 2075, surpassing Japan, Germany, and the United States, investment bank Goldman Sachs said in a report. India is currently the world's fifth-largest economy.

According to the Goldman Sachs report, the factors driving this expectation are favorable demographics, innovation and technology, increasing capital investment, and rising worker productivity.

"Over the next two decades, India's dependency ratio will be one of the lowest among regional economies," the report stated.

According to Goldman Sachs Research's India economist, Santanu Sengupta, innovation, rising worker productivity, and capital investment will all be important drivers of growth in the future.

"Yes, the country has demographics on its side, but that will not be the sole source of GDP. The fifth-largest economy in the world is going to need innovation and higher worker productivity. Technically speaking, that indicates the Indian economy's labor and capital are producing more per unit" he said. 

"India's savings rate is likely to increase with falling dependency ratios, rising incomes, and deeper financial sector development, which is likely to make the pool of capital available to drive further investment," he added.

The report said that the government prioritized infrastructure development, particularly road and rail construction. Goldman Sachs feels that now is an excellent time for the private sector to ramp up capacity creation in manufacturing and services in order to generate more employment and absorb the huge labor force.

Downside Risks

According to the report, the largest danger to India's economic growth is a decline in labor-force participation.

"The labor force participation rate in India has declined over the last 15 years," the report stated, emphasizing that women's labor-force participation rate is much lower than men's.