India to Overtake U.S. to Become World’s 2nd Largest Economy by 2075

India is said to become the world’s second-largest economy by 2075, overtaking not just Japan and Germany, but the U.S., too, says Goldman Sachs. The report stated that the main downside risk for India's economic growth would be if the labor force participation rate decreased.

In addition to a growing population, the country's advancements in innovation and technology, increased capital investment, and improved worker productivity are what is increasing 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 added 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 dependency ratios among other large 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.

India's government has prioritized building infrastructure, particularly when it comes to building highways and railroads. In order to encourage investments in infrastructure, the nation's most recent budget plans to maintain the 50-year interest-free lending programs to state governments.