India is projected to have the world’s second-largest economy by 2075, ranking after China, according to a research report by global investment banking company Goldman Sachs. The report highlights the factors that will contribute to India’s economic growth, including booming services exports, progress in innovation and technology, and a favorable environment for private sector capital expenditure. However, the report also identifies the declining labor force participation rate in India as a key downside risk for the economy. The report notes that the labor force participation rate in India has been declining over the past 15 years, with the women’s labor force participation rate significantly lower than men’s. The report emphasizes the importance of addressing this issue to ensure sustained economic growth. The report also highlights the positive impact of digitalization on the Indian economy, citing the wide penetration of the Internet and mobile Internet as well as the unique identification number system known as Aadhaar, which is the world’s largest biometric ID system. The report states that Aadhaar has made public service delivery easier and more targeted, providing an upside to growth through increased productivity. The report also identifies capital investment as a significant driver of future growth in India. It notes that India’s savings rate is likely to increase with falling dependency ratios, rising incomes, and deeper financial sector development. The report acknowledges the government’s efforts in this area. The report mentions that India’s growth so far has been driven mainly by domestic consumption and domestic investments. However, it notes that macro imbalances are reducing, thanks to inflation targeting and services exports, which are cushioning the current account balance. The report also refers to recent growth forecasts by the World Bank and the International Monetary Fund (IMF) for India. The World Bank expects India’s growth to slow down further to 6.3% in the financial year FY 2023/24 due to constrained private consumption caused by high inflation. The IMF has also lowered its GDP growth forecast for India for the financial year 2023-24 by 20 basis points to 5.9%. Overall, the report paints a positive outlook for India’s economic future, but it also highlights the challenges that need to be addressed to sustain and accelerate growth.