Goldman Sachs Forecasts India to Become World’s 2nd Largest Economy by 2047, Boosted by Strong Growth and Reforms
India has been projected to become the world’s second-largest economy by 2047, according to a forecast by Goldman Sachs. This development comes as Prime Minister Narendra Modi envisions a developed India by 2047, coinciding with the country’s centenary of Independence. Despite the setback caused by the Covid-19 pandemic, India’s GDP has seen significant growth in recent years, standing at $3.75 trillion at present.
Goldman Sachs’ forecast aligns with Chief Policy Advisor D K Shrivastava’s estimation last August that India’s economy could reach $5 trillion by fiscal year 2027, followed by $10 trillion, $20 trillion, and $30 trillion by fiscal years 2034, 2043, and 2048, respectively. These ambitious targets require steadfast public-private partnerships, favorable policies, reforms, and an inclusive and sustainable environment that allows every section of the population to contribute to the country’s growth.
According to the Reserve Bank of India’s July bulletin, titled India@100, achieving developed nation status by 2047 requires sustained annual GDP growth of 7.6%. This growth rate is vital in raising India’s current per capita GDP from $2,500 to $22,000. To achieve this, the report emphasizes the need for investments in physical capital and comprehensive reforms across various sectors such as education, infrastructure, healthcare, and technology, to enhance productivity. Furthermore, collaboration between the government, private sector, civil society, and citizens is crucial for driving this transformative growth.
The report also highlights the importance of increasing the share of the industrial sector, particularly manufacturing, in India’s GDP. Currently, the industrial sector accounts for 25.6% of the GDP, and the report suggests raising this share to 35% by 2047-48. To accomplish this, the sector must grow at a nominal rate of 13.4%. Recent initiatives like the Production Linked Incentive Scheme (PLI), Atmanirbhar Bharat, and one district one product, coupled with a focus on the micro, small, and medium enterprise (MSME) sector, can significantly bolster manufacturing and manufacturing exports.
To enhance productivity, the report recommends increasing spending on research and development (R&D). India’s current R&D expenditure of 0.7% of GDP is considerably lower than that of countries like South Korea, Germany, and China, which invest 4%, 3%, and 2% of their respective GDPs, respectively. Furthermore, the diffusion of frontier technologies to domestic firms, reallocation of the labor force to high-productivity sectors, and an upscaling of production capabilities are all crucial factors in promoting a transition to a high-income country status.
Capital accumulation, savings and investment, and improvements in education and healthcare are also key drivers of India’s development. Emphasizing quality education, skills development, and a shift from the unorganized to the organized sector are essential elements in leveraging India’s demographic dividend. Additionally, reducing the dependence on agriculture and encouraging women-friendly policies and self-employment opportunities can significantly boost individual contributions to the GDP.
To achieve the vision of India 2047, the report underlines the importance of the country’s start-up ecosystem, e-commerce, digitalization, integration with the global value chain, and various government initiatives, such as the National Logistics Policy and PM Gat-Shakti. Furthermore, investments in public digital infrastructure, AI and ML technologies, climate change initiatives, emission-free industries, and renewable energy sources like solar, wind, and hydrogen are necessary to create both physical and social infrastructure.
To attain these ambitious targets, the report suggests a multi-pronged approach focused on robust manufacturing and services sectors, structural reforms, skill development, knowledge-oriented industries, harnessing tourism potential, energy security, and a reduction in logistics costs. These measures aim to secure sustainable economic growth and transform India into a developed nation by 2047, while also enhancing its global standing.
India’s journey towards becoming the world’s second-largest economy by 2047 demands consistent efforts and collaboration from all stakeholders. By implementing the recommended reforms and embracing inclusive growth policies, India can unlock its true potential and emerge as a global powerhouse over the next few decades.
