India to overtake US to become world’s second largest economy by 2075: Report – Times of India

New Delhi: According to a report Goldman Sachs ResearchIndia is expected to become the world’s second largest economy by 2075, overtaking the US.
As of now, India holds the position of the fifth largest economy in the world after Germany, Japan, and China. United States of america,
India’s population of 1.4 billion, already said to be the largest in the world, is set to be a major driver behind the country’s economic growth in the coming years.
However, to harness the potential of its growing population, India needs to increase labor force participation and focus on providing training and skills to its talented workforce. Santanu SenguptaIndian economist at Goldman Sachs Research.
The report highlights the importance of innovation and increasing labor productivity, which will contribute to higher output per unit of labor and capital. Capital investment is another important driver, as India’s savings rate is expected to rise with a fall in the dependency ratio, rise in income and a more developed financial sector. Sengupta believes that given the healthy balance sheets of private corporates and banks in India, conditions are favorable for the private sector capital expenditure cycle.
Favorable demographics including a large and relatively young population will also contribute to India’s potential growth. Sengupta believes that India will have the lowest dependency ratio among major economies in the next 20 years.
“So this is really the window for India to get it right in terms of setting up manufacturing capacity, continuing to grow in services, continuing to develop infrastructure,” Sengupta said.
However, effectively utilizing the labor force and raising the labor force participation rate are key challenges that require creating employment opportunities and investing in training and upskilling.
Sengupta also discussed some of the key risks to India’s economic growth. A bigger downside risk is if the labor force participation rate fails to rise, especially among women. Higher productivity resulting from digitization, wider internet access and implementation of the Aadhaar system could lead to growth prospects, which facilitate public service delivery, expand credit availability and improve productivity.
(with inputs from agencies)