The world is witnessing India’s growth with remarkable economic resurgence. There are many projections of India’s GDP growth between 6-7% in 2023 – making it the world’s fastest growing major economy. Powered by its massive and youthful population, India is poised to transform from a $3-5 trillion economy today to a $7 trillion powerhouse by the end of the decade.
While the U.S. and China still dwarf India in total GDP, there are several factors that could allow India’s growth to eventually surpass China as the primary driver of global economic growth. For starters, India’s growth only needs to grow about 1% faster per year than China to overtake it by 2028, an achievable target given China’s own economic challenges.
India’s Growth Shift
Additionally, investors worldwide are shifting capital away from the increasingly difficult business environment in China and toward the promising opportunities in India. Major multinational companies like Samsung, Apple, and Boeing are actively expanding their operations in the country.
Demographics also give India’s growth a significant edge over China. With over 50% of its population under 30 years old, India is poised to harness the power of a young, dynamic workforce. In contrast, China’s population is aging rapidly. Moreover, closing India’s large gender employment gap could boost its GDP by nearly a third by 2050.
India’s Challenges
However, we also acknowledge that India’s growth faces substantial hurdles to fully realizing its economic potential. Manufacturing still accounts for only 16% of India’s economy, compared to 26% in China. The Indian government aims to grow this share to 25% by 2025, but significant investments in infrastructure will be required to support a manufacturing renaissance.
Indeed, India’s outdated and inadequate roads, railroads, ports, and other critical infrastructure have long held back its economic development. Addressing these deficiencies will be essential for India to modernize and maximize the productivity of its workforce.
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Conclusion
Overall, there is an optimistic picture of India’s growth future, arguing that the “sky is the limit” if the country can translate its demographic dividend into job creation. While challenges remain, the combination of favorable trends – from shifting global capital flows to a young populace – suggests India is poised to emerge as the world’s next economic superpower, potentially even surpassing China in the coming years.
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