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Goldman Sachs predicts that the Indian economy will surpass the United States by 2075.



According to Goldman Sachs, India is expected to surpass not only Japan and Germany but also the United States to become the world's second-largest economy by 2075. Currently, India ranks as the fifth-largest economy, following the U.S., China, Japan, and Germany. The projection is based on factors such as India's growing population, advancements in innovation and technology, increased capital investment, and rising worker productivity, as stated in a recent report by the investment bank.


Goldman Sachs Research's India economist, Santanu Sengupta, highlighted that India's dependency ratio, which measures the proportion of dependents to the total working-age population, is expected to be one of the lowest among regional economies in the next two decades. This suggests a favorable environment with a higher number of working-age adults who can support the youth and elderly population. Sengupta emphasized the importance of maximizing the potential of India's expanding labor force by boosting labor force participation, setting up manufacturing capacity, promoting services growth, and investing in infrastructure.


To accelerate economic growth, India's government has prioritized infrastructure development, particularly in roads and railways. The recent budget aims to continue interest-free loan programs to state governments, enabling investments in infrastructure. Goldman Sachs suggests that this is an opportune time for the private sector to expand manufacturing and services capacities to generate more employment opportunities and absorb the large labor force.


Furthermore, India's progress in technology and innovation is a driving force in its economic trajectory. The country's technology industry revenue is projected to increase significantly by the end of 2023, driven by the IT, business process management, and software product sectors. Goldman Sachs also predicts that capital investment will play a crucial role in India's growth, as the savings rate is expected to rise due to declining dependency ratios, increasing incomes, and further development of the financial sector.


However, the report acknowledges potential challenges. The labor force participation rate in India has declined in recent years, and increasing it at the projected rate is crucial for sustained growth. Particularly, women's participation rate in the labor force is significantly lower than men's. Additionally, India's current account deficit, resulting from net exports, has affected economic growth. Nevertheless, the country's economy is driven primarily by domestic demand, with up to 60% of growth attributed to domestic consumption and investments.


S&P Global and Morgan Stanley have also predicted that India is on track to become the third-largest economy by 2030. In the first quarter, India's GDP expanded by 6.1% year-on-year, surpassing expectations, and the full-year growth is estimated to reach 7.2% compared to the previous fiscal year's 9.1% growth.

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