Section I A Detailed Analysis of Goldman Sachs’ Forecast: India’s 6–7% Annual Growth Versus the U.S. 2.0–2.5%

Goldman Sachs and other major institutions project that India will maintain a real annual GDP growth rate of 6–7 percent, significantly higher than the United States’ 2.0–2.5 percent. This contrast underscores India’s potential to become the world’s next major engine of economic expansion. According to Goldman Sachs’ 2023 report, India’s demographic advantages, rapid urbanization, and ongoing policy reforms may allow it to become the world’s second-largest economy by 2075, surpassing the United States and trailing only China. India’s demographic structure is the core driver of its growth: by 2025 the country reached 1.41 billion people, with more than half under 30 and 67 percent in the working-age group. The International Labour Organization estimates that India’s labor force will reach one billion by 2030, bolstering both manufacturing and services. In contrast, the United States faces long-term constraints from an aging population, a declining labor-force participation rate, and a rising proportion of retirees.

India’s infrastructure investment further strengthens growth momentum. In fiscal year 2024–25, the government increased capital expenditure to 11.21 trillion rupees, largely directed toward railways, highways, ports, and renewable energy projects. India added more than 1,200 kilometers of high-speed rail in 2024 and plans to reach 6,000 kilometers by 2030. The private sector is also recovering as bank lending expanded by 12 percent in 2024. Meanwhile, India’s domestic market has become a key growth pillar, with the retail sector reaching USD 1.2 trillion in 2024 and projected to reach USD 2 trillion by 2030. Private consumption accounts for 58 percent of India’s GDP and is supported by low inflation, expanding incomes, and tax reductions.

However, India faces significant structural challenges. The labor-force participation rate remains at 49.6 percent, with female participation as low as 18.6 percent. Educational quality varies greatly across regions, infrastructure gaps persist, and geopolitical tensions with neighboring countries pose risks. Foreign direct investment, although relatively strong at USD 80 billion in 2024, still trails China. The United States, despite its slower growth, retains advantages in innovation, advanced manufacturing, financial markets, and global influence. India’s 6–7 percent growth rate reflects strong economic momentum, but sustaining it requires overcoming deep-rooted institutional and structural constraints.

Section II The Difference Between Purchasing Power Parity (PPP) and Nominal GDP: The Significance of India Catching Up with the U.S. in PPP in 2024

Purchasing power parity (PPP) and nominal GDP offer two distinct perspectives on economic size. PPP adjusts for domestic price levels and reflects real purchasing power, while nominal GDP—calculated at market exchange rates—represents international economic influence. In 2024, India’s nominal GDP was about USD 3.8 trillion, ranking fifth globally and far below the United States’ USD 26.9 trillion. Yet under PPP, India’s GDP reached USD 13.1 trillion, ranking third—behind only China and the United States. This discrepancy reveals India’s vast domestic economic activity and the relatively low cost of living that inflates its PPP value.

India’s PPP strength highlights the scale of its domestic consumption. A basic meal costing USD 2 in Mumbai compared with USD 20 in New York illustrates how India’s internal purchasing power is magnified under PPP. India’s per-capita nominal GDP is only USD 2,880, but rises to USD 11,110 under PPP—still far behind the United States’ USD 81,000 but significantly closer. India’s nominal GDP remains suppressed due to the rupee’s low international value and limited global usage—only 0.5 percent of global trade used the rupee in 2024.

India catching up with the United States in PPP indicates that its domestic economy is approaching the scale of the world’s most advanced economies. India’s PPP GDP reached 49 percent of the U.S. level in 2024 and could reach 80 percent by 2035, potentially surpassing the United States in the late 2040s. This reflects India’s expanding consumer market, growing services sector, and rising industrial output. Yet the gap in nominal GDP highlights persistent structural weaknesses: limited export diversification, insufficient high-value manufacturing, slow currency internationalization, and continued poverty affecting 15 percent of the population. Turning PPP strength into global influence requires deep reforms, technological advancement, and sustained export growth.

Section III India’s Potential to Catch Up with the U.S. in the 2050s and the Pathway to Achieving It

Forecasts from Goldman Sachs and PwC suggest that India’s GDP in PPP terms may surpass the United States in the late 2040s or early 2050s, while nominal GDP could do so in the 2070s. Achieving this trajectory relies on India’s demographic advantages, policy reforms, industrial upgrading, and technological progress. India’s young population remains its strongest asset: the working-age share is projected to rise to 68 percent by 2035, compared with a decline to 60 percent in the United States. If India raises female labor-force participation to 40 percent, its GDP could grow an additional 1.5 percent annually by 2035. Improving education is essential, as tertiary enrollment stands at only 30 percent compared with 80 percent in the United States. India plans massive investments in vocational training and aims to raise high-school enrollment to 90 percent by 2030.

Industrial transformation is critical. Manufacturing accounts for only 15 percent of India’s GDP, far below China’s 30 percent. The “Make in India” initiative has boosted electronic manufacturing, with India producing about 10 percent of global smartphones by 2024. Meanwhile, India has advanced rapidly in technological innovation, rising from 81st to 39th in the Global Innovation Index between 2015 and 2024, although it still lags far behind the United States’ dominance in AI, semiconductors, and advanced research.

Infrastructure development will provide the foundation for sustained high growth. Between 2025 and 2030, India plans to invest USD 1.5 trillion in railways, ports, logistics networks, and renewable energy. FDI inflows are expected to grow to USD 120 billion by 2030 if India continues to improve regulations and expand market access. Yet major challenges persist, including poverty, inequality, climate risk, and employment disruption from AI technologies. Achieving long-term convergence with the United States requires institutional stability, policy consistency, sustained investment in human capital, and a balanced approach to geopolitical competition.

Section IV India’s Changing Position in Global GDP Rankings: From Fifth to Potentially Third, Surpassing Japan and Germany

India’s rapid economic rise is reshaping global GDP rankings. Based on IMF data, India’s nominal GDP reached USD 3.8 trillion in 2024, ranking fifth globally behind the United States, China, Japan, and Germany. In PPP terms, India already ranked third at USD 13.1 trillion. IMF projections indicate that India may surpass Japan in 2026 and Germany in 2027 to become the world’s third-largest economy in nominal terms. India’s growth momentum is far stronger than that of Japan and Germany: India’s nominal GDP grew 9.9 percent in 2024, compared with Japan’s 0.3 percent and Germany’s contraction of –0.1 percent. Japan faces severe demographic decline, with nearly 29 percent of its population over 65, while Germany struggles with energy insecurity and labor shortages. India’s expanding population, rising consumption, and accelerating reforms give it a clear advantage.

Surpassing Japan and Germany would significantly elevate India’s global economic and geopolitical influence. Its expanding consumer market—projected to reach USD 2 trillion by 2030—will attract multinational companies, demonstrated by Apple relocating 20 percent of its iPhone production to India in 2024. India’s voice in global governance institutions such as the G20 and BRICS is also rising. However, India’s per-capita GDP remains far lower than that of Japan and Germany, indicating that living standards still lag behind. Reducing inequality, expanding education and healthcare access, and creating sufficient employment opportunities—estimated at 200 million new jobs needed by 2035—are crucial for balancing growth and social stability.

India’s rise to the position of the world’s third-largest economy appears likely, but sustaining long-term ascent toward superpower status requires overcoming persistent structural constraints. These include large income gaps, uneven infrastructure development, low labor-force participation—especially for women—regional disparities, and institutional inefficiencies. Competition from China’s manufacturing strength and the United States’ technological dominance remains formidable. India must deepen reforms, enhance technological capacity, expand trade, and strengthen international partnerships to consolidate its upward trajectory. Its economic rise will shape the twenty-first century, offering immense opportunities while demanding sustained commitment to structural transformation.