India is projected to become the second largest economy in the world by 2075, surpassing Japan, Germany, and the United States, investment bank Goldman Sachs said in a report. The South Asian country is currently the fifth largest economy in the world. ACCORDING TO THE BANK’S ESTIMATES, its GDP is forecast to grow significantly in the coming years, reaching $52.5 trillion by 2075. It added that innovation and technology, higher capital investment, and rising worker productivity will be the main factors driving this forecast.
The investment bank also cited favorable demographics, including high labor force participation and the country’s working-age population ratio, one of the lowest among regional economies. It said the country also has significant potential for economic growth through increased investment in infrastructure, including roads and railroads. The government has already prioritized these projects and is expected to continue this policy.
Despite the country’s many positive indicators, some challenges need to be addressed for India to reach its full potential, Goldman Sachs said. The biggest challenge is to boost labor force participation, it said. The report pointed out that women’s participation in the labor force has declined in recent years, a factor that will limit economic growth. It also emphasized that increasing productivity will be crucial for the country’s economy to grow, and it urged the government to invest in technology and improve worker efficiency.
In addition, the bank argued that India’s current account deficit would drag on its economic growth in the near term. However, it noted that the country’s services exports could help to cushion this shortfall. The investment bank further emphasized that this is a window of opportunity for the Indian private sector to set up manufacturing capacity and grow its services exports.
Moreover, the report highlighted that high import taxes and red tape were impediments to the country’s growth. It also said that the country had to continue reforming its labor laws and make it easier to do business. In the long run, these policies will help to reduce red tape and increase worker efficiency, which is vital for boosting growth in the country.
As a result of the changes, the country’s GDP is forecast to grow at an average annual rate of 6.2% from 2020 to 2050. According to the Goldman Sachs estimate, It is expected to slow down to 4.5% from 2050 to 2075. This is a lower annual growth rate than China’s, but the bank pointed out many challenges facing both countries. In the long run, it will be a close race between India and China, and it will be interesting to see which country will overtake the other first. The US is currently the world’s second-largest economy but will eventually lose this title to China. Germany holds the top spot. This is because exports and consumption have boosted the German economy.
