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India - towards becoming the third largest economy in the world

In the current century, unlike other major economies, the Indian economy has a significant advantage linked to the economic potential of its large size and age structure of its population. Recent population trends  indicate that India has already overtaken China in terms of total population. With this, India is estimated to have the largest share of the global population at 17.8%, equivalent to more than one-sixth of the global population. In terms of the share of working-age population, India is expected to overtake China in 2030. This share is projected to remain not only higher than that of China in the remaining decades of this century, but the gap is also estimated to increase. Further, India would maintain the lowest old-age dependency ratio throughout the remaining decades of the century relative to the peer countries , enabling higher saving and investment rates.

A key challenge for the Indian economy is to find productive employment for the large and growing working age population. Creation of suitable employment opportunities is therefore India’s key current policy challenge. This situation may become even more challenging due to the emerging labor-saving technological developments relating to AI and Generative AI. It is notable that India’s total labor force participation rate estimated at 49.6% in 2024 is the lowest among peer countries. India’s female labor force participation rate at 24.1% would also be the lowest amongst these countries.


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