By 2075, India will surpass not just Japan and Germany but also the United States to become the second-largest economy in the world, according to Goldman Sachs. Currently, India is the world’s fifth-largest economy, behind Germany, Japan, China and the US.
In addition to a growing population, India's advancements in innovation and technology, increased capital investment, and improved worker productivity are what are fueling the prediction, according to a recent analysis by the investment bank.
“Over the next two decades, the dependency ratio of India will be one of the lowest among regional economies,” said Goldman Sachs Research’s India economist, Santanu Sengupta.
The dependence ratio of a nation is determined by dividing the total population of working age by the number of dependents. A low dependency ratio means that there are proportionately more adults of working age who can assist the young and old.
Sengupta said that increasing labor force participation is the key to maximizing the potential of India's rapidly expanding population. And Sengupta predicts that for the next 20 years, India will have one of the lowest reliance percentages among major 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,” he said.