International Herald Tribune
India projected to pass U.S. as No. 2 economy by 2050 By Anand Giridharadas Published: January 24, 2007
MUMBAI: India will unseat the United States by 2050 as the planet's second-largest economy, after China, and become a motor of global growth, according to a new forecast by Goldman Sachs, the investment bank.
India has moved onto a much faster growth trajectory than the bank had previously expected, fueled by strong and steady productivity gains in its legions of new factories, which are producing everything from brassieres to cars.
India's rise will lead to increasing global competition for resources and more pressure on the environment, Goldman said.
Goldman now expects India, whose trade has been growing 25 percent annually since 2003, to grow at 8 percent a year through 2020, higher than the 5.7 percent rate it predicted in 2003.
That year it published what is now widely known as the BRICs report, on the rise of Brazil, Russia, India and China. That report helped to galvanize global interest in developing economies and was often cited by investors during the 2006 bullish emerging-country stock market.
Goldman put out a research paper arguing that "India's influence on the world economy will be bigger and quicker than implied" in 2003.
Not all of that influence will be welcome. Accompanying India's growing prosperity, the bank predicted, will be ravenous demand for resources and profound environmental impacts.
As the country's per capita income quadruples between now and 2020, according to the bank, Indians will buy five time more cars and use three times more crude oil than they now do. India imports 70 percent of its oil today, and its increased needs will put it into direct competition with the United States and Europe for access to Middle Eastern oil and energy from other sources.
Geopolitical strategists have warned that the race for energy will spur a kind of diplomatic race to the bottom, in which India and China woo diplomatically isolated, energy-rich nations like Iran and Sudan. That, in turn, will make those supplier nations less vulnerable to international pressure on issues like nuclear proliferation or ethnic conflict.
The Goldman report also contains startling projections of how India's cities, which can barely cope with the teeming millions they already have, are likely to mushroom even further.
India already has 10 of the 30 fastest- growing cities in the world. Goldman projected that 140 million rural dwellers would migrate to the cities by 2020, and 700 million — a population equivalent to all of Europe — by 2050. That translates into 45,000 rural migrants arriving in Indian cities every day between now and 2050, or 31 per minute.
Much still could disrupt Goldman's growth forecasts. The report said that persistent inequality in the face of rising aspirations could foment "social tensions, political pressure to slow down the reform process and increasing protectionism."
"If managed badly," the report said, "this has the potential to kill the growth goose."
-- My humanity is in feeling we are all voices of the same poverty. - Jorge Louis Borges