 "India may be world's 2nd-largest economy by 2075, says Goldman Sachs")
India is poised to become the second-largest economy in the world by 2075, surpassing not only Japan and Germany but also the United States, according to a Goldman Sachs report.
The report projected India’s GDP at $52.5 trillion by 2075, behind China’s $57 trillion but ahead of the US’ $51.5 trillion.
Currently, India is the world’s fifth-largest economy, behind Germany, Japan, China and the US. According to the Economic Survey tabled in Parliament in January this year, the Indian economy was projected to reach the $3.5 trillion mark by the end of March.
For India, a key to realising the potential of that growing population is boosting participation within its labour force, as well as providing training and skills for its immense pool of talent, Santanu Sengupta, Goldman Sachs Research’s India economist, was quoted as saying in the report. India, according to UN projections, surpassed China as the world's most populous country earlier this year.
“Over the next two decades, the dependency ratio of India will be one of the lowest among regional economies," he said, stressing that India’s population has one of the best ratios between its working-age population and its number of children and elderly. “So that really is the window for India to get it right in terms of setting up manufacturing capacity, continuing to grow services, continuing the growth of infrastructure.”
The dependency ratio is a measure of the ratio of the number of dependents to the total working-age population in a country or region.
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Besides “demographics on its side”, according to Sengupta, “innovation and increasing worker productivity are going to be important for the world’s fifth-biggest economy”.
In technical terms, that means greater output for each unit of labour and capital in India’s economy, the economist said.
The Goldman Sachs report said the government has placed a priority on infrastructure creation, especially roads and railways.
On capital investment, Sengupta said the government has done “the heavy lifting in the recent past”. “But given healthy balance sheets of private corporates and banks in India, we believe that the conditions are conducive for a private sector capex cycle.”
The Goldman report said among the downside risks to its projections is the labour force participation rate. “The labour force participation rate in India has declined over the last 15 years. If you have more opportunities — especially for women, because the women’s labour force participation rate is significantly lower than men’s — you can shore up your labour force participation rate, which can further increase your potential growth,” the report added.