Goldman Sachs, one of the world’s leading investment banks, has recently published a report that projects India’s economic growth over the next five decades. According to the report, India is expected to overtake the United States as the world’s second-largest economy by 2075, behind only China.
The report, titled “The Long-Term Outlook for India: From Potential to Reality”, analyzes the factors that will drive India’s economic performance in the long run, such as demographics, productivity, investment, and governance. The report also compares India’s prospects with those of other major economies, such as China, the US, Japan, and the European Union.
The report estimates that India’s gross domestic product (GDP) will grow at an average annual rate of 6.2% from 2020 to 2050, and then slow down to 4.5% from 2050 to 2075. This implies that India’s GDP will increase from $2.9 trillion in 2019 to $28.5 trillion in 2050, and then to $70.2 trillion in 2075. By contrast, the US GDP will grow at an average annual rate of 1.6% from 2020 to 2050, and then decline to 1.4% from 2050 to 2075. This implies that the US GDP will increase from $21.4 trillion in 2019 to $34.1 trillion in 2050, and then to $46.3 trillion in 2075.
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The report also forecasts that India’s GDP per capita will rise from $2,100 in 2019 to $16,700 in 2050, and then to $39,000 in 2075. However, this will still be lower than the US GDP per capita, which will rise from $65,100 in 2019 to $81,400 in 2050, and then to $97,800 in 2075.
The report attributes India’s impressive growth potential to its favorable demographics, which will provide a large and young labor force for decades to come. The report estimates that India’s working-age population (15-64 years) will increase from 962 million in 2019 to 1.1 billion in 2050, and then decline slightly to 1 billion in 2075. By contrast, the US working-age population will decrease from 260 million in 2019 to 254 million in 2050, and then to 243 million in 2075.
The report also highlights the importance of improving India’s productivity, which measures how efficiently inputs such as labor and capital are used to produce output. The report notes that India’s productivity is currently low compared to other major economies, but it has room for improvement. The report also notes that India has shown resilience and adaptability during the Covid-19 crisis, which bodes well for its future recovery and development.
However, the report also cautions that India faces several challenges and risks that could hamper its growth trajectory. These include its high public debt and fiscal deficit, its low female labor force participation and gender gap, its environmental and social issues such as pollution and inequality, and its geopolitical tensions with neighboring countries such as China and Pakistan.
The report concludes that India has a unique opportunity to leverage its demographic dividend and its technological innovations to achieve its economic potential and become a global leader in the 21st century. It also suggests that India should continue to pursue structural reforms, enhance its institutional quality and governance, foster inclusive and sustainable growth, and deepen its integration with the global economy.