By 2075, India could overtake the US to become the world’s second largest economy.
According to Goldman Sachs, India’s rapid economic growth could make it the world’s second largest economy by 2075, overtaking the likes of Japan, Germany, and the United States. Its recent report states that favorable demographics, the further development/implementation of innovative technologies, and increased productivity should encourage such a leap forward, says India’s English-language channel WION.
In a latest paper, Santanu Sengupta, an economist at Goldman Sachs Research, says that favorable demographics, the adoption of innovative technologies, higher capital investment, and increased productivity can effectively drive economic growth, enabling India to become the world’s second largest economy as early as 2075. He predicts that India could soon overtake industrialized countries such as Japan, Germany, and the US.
Today, figures show that India is only the 5th largest economy in the world. So far, it is behind Germany, Japan, China, and the US in the main indicators, but this will gradually change. “Over the next two decades, India’s dependency ratio will be one of the lowest among regional economies,” says Mr. Sengupta.
“India has made more progress in innovation and technology than some can even imagine,” he also noted. Demographics will help India in this case as well, but they will not be the only factor accelerating GDP growth. Mr. Sengupta also highlights that further adoption of innovative technologies and productivity improvements will be crucial: “In technical terms, it means increasing the output per unit of labor and capital in the Indian economy”.
He also notes that India’s government focus on infrastructure development, particularly roads and railways, may provide a further boost to economic growth. The time has come, say experts, for private companies to step up to the plate and increase capacity in production and services to create more jobs for the country’s growing population.
The only problem that may slow down economic growth is that employment levels are unlikely to rise as much as predicted. This is particularly the case for working women who are still less numerous than men. Indian experts recommend businesses to create more opportunities for women as it will help to further stimulate potential upswing, reports WION.
A recent survey by Time magazine reveals that almost half of India’s population (around 650 million people) is under the age of 25. That means the country won’t peak until ~2065. Adults aged 65 and over make up only about 7% of India’s population, compared with 14% in China and 18% in the US, the magazine points out.
The average forecast by UN experts suggests that the proportion of Indians aged 65 and over is likely to remain below 20% until 2063 — and will not reach 30% until 2100. Favorable demographics could further boost India’s economic development and allow it to overtake the United States, still considered one of the world’s great superpowers, reports Goldman Sachs.
Notably, this report was published on the day it was announced that the Foxconn-Vedanta mega-semiconductor fab would be closed, WION writes. Observers agree that such a favorable outlook could provide an additional confidence boost to the present Indian government.