How Will India Become World’s 2nd-Largest Economy, Surpassing US?

Goldman Sachs has projected that India will become the world’s second-largest economy by 2075, surpassing Japan, Germany, and even the United States. This prediction is based on factors such as innovation, technology, higher capital investment, and rising worker productivity, which are expected to contribute to India’s economic growth. The report highlights the importance of capital investment in driving India’s future growth, with a predicted increase in the country’s savings rate due to falling dependency ratios, rising incomes, and the development of the financial sector. Leveraging its growing workforce and low dependency ratio, India has an opportunity to focus on manufacturing capacity, services expansion, and infrastructure development.

To fully harness the potential of its growing population, India needs to increase labor force participation. The report points out a decline in the labor force participation rate over the past 15 years and a significantly lower participation rate of women compared to men. Encouragingly, Goldman Sachs sees this as an opportune time for the private sector to expand manufacturing and services, creating more jobs and absorbing the large labor force in the country. However, the report also acknowledges that India’s growth has been hindered by net exports due to its current account deficit.

It is worth noting that other financial institutions, such as S&P Global and Morgan Stanley, have also predicted India’s rise, projecting it to become the third-largest economy by 2030. Overall, the projections by Goldman Sachs and other institutions indicate a positive outlook for India’s economic future, emphasizing the importance of capital investment, workforce participation, and private sector growth in driving the country’s growth trajectory.