India to Overtake U.S. and Euro Area in GDP by 2075: Goldman Sachs Research
According to Goldman Sachs Research, India is set to become the world’s second-largest economy by 2075, surpassing the United States and trailing only China in terms of GDP. As India’s 1.4 billion population becomes the largest in the world, its GDP is projected to reach $52.5 trillion, outpacing the U.S. ($51.5 trillion), Euro Area ($30.3 trillion), Japan ($7.5 trillion), and the UK ($7.6 trillion).
Demographics and Labor Force Growth
A key factor driving India’s economic growth is its young and expanding labor force. According to Santanu Sengupta, Goldman Sachs’ India economist, India’s dependency ratio—the proportion of non-working-age individuals to the working-age population—will be one of the lowest among major economies for the next two decades. This presents a crucial opportunity for India to strengthen its manufacturing, services, and infrastructure sectors.
However, one of the biggest challenges will be increasing labor force participation, particularly among women. If India can create more job opportunities and improve workforce skills, its economic potential will expand even further.
Drivers of India’s Economic Rise
India’s growth trajectory is expected to be fueled by several factors:
Technological Innovation & Digitalization – India has made significant strides in digital infrastructure, including Aadhaar (biometric ID), mobile internet expansion, and fintech growth. These advancements improve public service delivery, financial inclusion, and business productivity.
Capital Investment – India’s savings rate is expected to rise, creating a larger pool of capital for investments. The private sector is also in a strong position to contribute to a new capital expenditure (capex) cycle, especially in manufacturing and infrastructure.
Domestic Demand & Services Exports – Unlike export-driven economies like China, India’s growth has been largely driven by domestic consumption, which makes up around 55-60% of the economy. Additionally, India’s services exports—particularly in IT and business outsourcing—are helping reduce trade deficits and macroeconomic vulnerabilities.
Challenges & Risks
While the projections are promising, risks remain. Labor force participation needs to increase, especially for women, to maximize India’s demographic advantage. Additionally, commodity price fluctuations, particularly in energy imports, could affect India’s trade balance and inflation levels.
Green Energy & Future Prospects
India has set ambitious targets for clean energy, including achieving net-zero emissions by 2070 and 50% non-fossil power generation by 2030. Investments in renewable energy, electric vehicles, and green hydrogen present a major growth opportunity. However, in the near term, fossil fuels will remain the dominant energy source until a full transition is possible.
India’s economic transformation is set to reshape global dynamics, with strong domestic demand, technological advancements, and demographic advantages driving its rise. As the nation continues to expand its manufacturing and infrastructure while embracing digitalization and clean energy, it is well on its way to becoming a global economic powerhouse by 2075.
