According to Santanu Sengupta, an economist for Goldman Sachs Research who specializes in India, the country will be the second-largest economy in the world by 2075 thanks to capital investment and a favorable demographic.

Sengupta stated in an article on the Goldman Sachs website that he predicts the Indian economy will overtake that of the United States with a GDP projection of $52.5 trillion, just behind China’s $57 trillion.

Sengupta stated that for India, increasing labor force participation and giving its enormous talent pool training and skills are essential to maximizing the potential of that growing population.

“Over the next two decades, India’s dependency ratio will be one of the lowest among regional economies,” he said. The “best ratio” between the number of people who are working-age and the number of children and elderly people in the nation, according to Sengupta.

“So that really is the window for India to get it right in terms of setting up manufacturing capacity, continuing the growth of services, and continuing the growth of infrastructure.”

According to him, increasing worker productivity will result in more output produced by each unit of labor.

Also, increasing capital investment will assist in doing this. With declining dependency ratios, rising income, and deeper financial sector growth, India’s savings rate—driven by favorable demographics—is predicted to rise. This will likely expand the pool of capital available to encourage additional investment, according to Sengupta.

Lower net exports and price alterations for commodities are two adverse possibilities, though. In contrast to a number of countries, especially in the region, which is more export-dependent, it is a largely domestic demand-driven economy, according to Sengupta.

According to him, domestic consumption, which accounts for about 55–60% of the total economy in addition to domestic investments, has been the main driver of the nation’s growth up to this point.

Additionally, since India imports the majority of its commodities, price changes like the volatility in energy prices brought on by global macro factors continue to be a concern.

Even though the Indian government wants to achieve net zero emissions by 2070, switching to green energy represents a “large investment opportunity, but it’ll take time, and in the interim, fossil fuels will be the majority share of India’s energy needs until India transitions to green energy.”


Topics #economy #India #population #rich country #World