As India becomes the world’s most populated country, India’s GDP is poised to reach $52.5 trillion marginally surpassing not just Japan and Germany, but the US GDP projection.
According to a recent forecast by Goldman Sachs, India is predicted to be the world’s second-largest economy by 2075.
Santanu Sengupta, Goldman Sachs Research’s India economist, said, “Over the next two decades, the dependency ratio of India will be one of the lowest among regional economies.”
India’s burgeoning population and one of the best ratios between its working-age population and its number of children and elderly will be the window for India to get it right in terms of setting up manufacturing capacity, continuing to grow services, continuing the growth of infrastructure, Sengupta added.
The dramatic expansion in the GDP is mainly attributed to progress in innovation and technology, higher capital investment and rising labour productivity.
The investment bank noted: “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,” Goldman’s report stated.”
However, adding that productively using the labour force remains a challenge, Sengupta explained, “The labour force participation rate in India has declined over the past 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.”
Beating all expectations, India’s first-quarter GDP recorded a 6.1% year-on-year growth. Other renowned reports from Morgan Stanley and S&P Global have forecasted India to become the third-largest economy by 2030.
