This is what leading investment bank Goldman Sach’s global research paper released on 22 January has to say. In 2050, China will be the largest economy.
The original report, published in 2003, had projected that India GDP’s would outstrip Japan’s by 2032 and that in 30 years it would be the world’s largest economy after China and US. The updated report now says that India will move one step up from No.3 to No. 2 in the global sweepstakes of tomorrow.
“India’s growth acceleration since 2003 represented a structural increase rather than simply a cyclinical upturn. Productivity growth drove nearly half of overall growth and expected it to continue for some years. The implication is that India’s contribution to world growth will be even greater and faster than implied in previous BRIC (Brazil, Russia, India and China) research,” states the report.
The underlying reasons for the upswing in India’s performance, according to the report, are an increased openness to trade, quality management, investment in information and communication technology; and greater financial deepening. The report forecasts that India’s GDP will surpass Italy, France and the UK by the middle of the next decade (around 2015). It will then overtake Germany, Japan and finally the US and, by 2050, it will emerge as the second-largest economy after China. New projections for India’s potential growth envisage an average growth of 6.9% from 2006 to 2050. From 2007 to 2020, Indian per capita GDP is likely to quadruple.
The higher growth rate would imply huge demand in the country, as Indians will also consume about five times more cars and three times more crude oil. India’s contribution to world growth will also be increasing. The higher growth rate under the new projections will have large implications for demand in the country. In some areas of corporate and structural reform, the country has used the current upswing to move at a faster rate than when the first study was done in 2003. Productivity in industry and services is more than four times than in agriculture, which employs nearly 60% of the labour force. More than 100 million people are estimated to enter the labour force by 2020
But, of course, we should not get too carried away by all this. Goldman Sachs also issues a warning: “To embark upon its growth story, India will have to educate its children and its young people and it must do so in a hurry. Lack of education can be a critical constraint to the growth of knowledge… The demographic dividend may not materialize if India fails to educate its people.”
This positive outlook should usher in good cheer in B-school campuses across India. As the Indian economy grows rapidly, demand for management talent will only rise. Those who hone their skills and are ready to meet challenges are certain to have a promising career. Are you ready for a roller-coaster ride?
