New Delhi:- According to Goldman Sachs, India is on track to become the world's second-largest economy by 2075, overtaking not only Japan and Germany but also the United States. India is currently the fifth largest economy in the world after Germany, Japan, China, and the United States.

"In addition to population growth, the forecast is driven by innovation and technological progress in the country, increased capital investment, and rising labor productivity," the investment bank said. "Over the next 20 years, India will become one of the least dependent economies in the region," said Santanu Sengupta, India economist at Goldman Sachs Research. 

A country's dependency ratio is measured as the number of dependent populations relative to the total working-age population. Low dependency rates indicate a proportionately larger number of working-age adults who can support the young and old.

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Sengupta added that increasing labor force participation is the key to realizing the potential of India's rapidly growing population. And Sengupta predicts that India will become one of the least dependent major economies in the next two decades.

"In short, this is a real window for India to do everything right in building manufacturing capacity, further expanding services and further expanding infrastructure," he said.  

The Indian government is prioritizing infrastructure development, especially roads and railways. The country's current budget aims to continue a 50-year interest-free loan program for state governments to encourage infrastructure investment.

Goldman Sachs believes it's the perfect time for the private sector to build more capacity in manufacturing and services to create more jobs and absorb more of the workforce. Advances in technology and innovation are also at the forefront of India's economic development, according to the investment bank. 

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India's tech industry revenue is expected to grow by $245 billion by the end of 2023, according to Nascom, India's private trade association. According to Nasscom's report, that growth will be driven by the flow of IT, business process management, and software products. Goldman also predicted that capital spending will be another key driver of India's growth.

“India’s savings rate is likely to rise due to lower dependency rates, rising incomes, and deepening financial sector development, making the capital pool available for further investment,” Goldman said in a report. high-performing,” he said. 

The Achilles heel of the bank's projections is labor force participation, and whether it is rising at the rate Goldman expects. "India's labor force participation rate has declined over the past 15 years," the report said, noting that women's labor force participation is "significantly lower" than men's.

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“Only 20% of all working-age women in India are employed,” the investment bank said in a separate report in June, noting that the low figure is due to the fact that women are mainly engaged in piecework. This may be due to the fact that there is an increase in the size of the economy, which is not explained by the economic data, he said. formal employment. 

Goldman said net exports are also weighing on India's growth as the country runs a current account deficit. But the central bank stressed that exports of services are easing current account balances.

India's economy, unlike many export-dependent economies in the region, is driven by domestic demand, with up to 60% of growth coming primarily from domestic consumption and investment, according to a Goldman report.

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S&P Global and Morgan Stanley also predict India is on track to become the world's third-largest economy by 2030. India's gross domestic product (GDP) grew 6.1% in the first quarter from a year earlier, well above Reuters' 5% growth forecast. Growth for the country as a whole is estimated at 7.2%, with growth of 9.1% in 2021-2022. 

The Investment Giant Goldman Sachs has predicted that India will be the one who will move ahead of the United States o America in terms of the World’s Economy by 2075.