India poised to become world's second largest economy

The US multinational investment bank Goldman Sachs said that, besides the growing population, technological progress, capital investment and labor productivity are the reasons for the growth of the Indian economy .

India is the world's fifth largest economy. (Source: Getty Images)

India is currently the world's fifth largest economy, after Germany, Japan, China and the United States.

“In the next two decades, India's dependency ratio will be the lowest in the region,” said Santanu Sengupta, India economist at Goldman Sachs Research.

A country's dependency ratio is measured as the percentage of its non-working-age population compared to its total working population. A low dependency ratio indicates that the country has a large number of working-age adults.

The key to tapping the potential of India’s rapidly growing population is to boost workforce participation, said Santanu Sengupta, adding that the country has a real opportunity to build manufacturing capacity and continue to develop services and infrastructure.

The Indian government has made infrastructure, especially roads and railways, a priority. The country's recent budget includes 50-year interest-free loan schemes for state governments to boost investment in infrastructure.

Goldman Sachs believes that now is the right time for the private sector to increase its scale, production capacity and services, to create more jobs and absorb a larger workforce.

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