In the latest study by Goldman Sachs, India is all set to become the worlds second-largest economy by 2075 as it is expected that the GDP of India, powered by its 1.4 billion population, will expand dramatically. As Indias population of 1.4 billion people becomes the worlds largest, its GDP is forecast to expand dramatically. Goldman Sachs Research projects India will have the worlds second-largest economy by 2075. https://t.co/CFFM0JsmEL pic.twitter.com/xHruyuSFex— Goldman Sachs (@GoldmanSachs) July 6, 2023Goldman Sachs Researchs India economist Santanu Sengupta said that Indias key to utilising the potential of its growing population is to boost participation within its labour force and training and skilling its talent pool.Heres the Goldman Sachs Research report:In the report, he said, “Over the next two decades, the dependency ratio of India will be one of the lowest among regional economies. So that really is the window for India to get it right in terms of setting up manufacturing capacity, continuing to grow services, continuing the growth of infrastructure.”The economist also stressed at populations of the country, saying it has one of the best rations between its working-age population and its numbers of children and elderly, it said. Further, the report said, “India has made more progress in innovation and technology than some may realize. Yes, the country has demographics on its side, but thats not going to be the only driver of GDP. Innovation and increasing worker productivity are going to be important for the worlds fifth-biggest economy. In technical terms, that means greater output for each unit of labour and capital in Indias economy.”“Capital investment is also going to be a significant driver of growth going forward. Driven by favourable demographics, Indias savings rate is likely to increase with falling dependency ratios, rising incomes, and deeper financial sector development, which is likely to make the pool of capital available to drive further investment,” it added.Government played a vital role: ReportHailing the governments efforts, the Goldman Sachs report said that the government has done the heavy-lifting in the recent years. “But given healthy balance sheets of private corporates and banks in India, we believe that the conditions are conducive for a private sector capex cycle,” it added.Indias population is key to opportunitiesHighlighting the opportunities, the report reiterates that Indias large population is clearly an opportunity, however, the challenge is productively using the labour force, by increasing the labour force participation rate.It added, “That will mean creating the opportunities for this labour force to get absorbed and simultaneously training and upskilling the labour force.”In India, the demographic transition is happening more gradually and over a longer time period than in the rest of Asia. This is primarily due to a more gradual decline in death and birth rates in India compared with the rest of Asia, the report stated.Goldman Sachs warning However, the report has also warned that the countrys big opportunity may be lost if its labour force participation will not rise. It said, “The labour force participation rate in India has declined over the last 15 years. If you have more opportunities – especially for women, because the womens labour force participation rate is significantly lower than mens – you can shore up your labour force participation rate, which can further increase your potential growth.”
