India’s potential growth over the next decade could be around 6 per cent. However, the nation can increase this growth to 6.7 and even 8.2 per cent through a combination of increased labor participation and investment rate.

India’s potential growth over the next decade could be around 6 per cent. However, the nation can increase this growth to 6.7 and even 8.2 per cent through a combination of increased labor participation and investment rate, said Goldman Sachs in a report. India can increase potential growth by any, or a combination of four levers including; increasing investment to GDP ratio, higher investment in human capital, labor force participation rate (LFPR) increase and productivity (TFP) growth. These levers by themselves can each boost potential growth by 50 bp to 100 bps over the next ten years. For India to grow at an even faster pace, increasing productivity growth is going to be critical, analysts said in the report.

According to the analysts, increasing investment to GDP ratio to the previous peak level of around 40% can alone boost potential growth by 50bp. If the labor force participation rate (LFPR) can be brought back to the previous peak level of 61%, it can boost potential growth by 100bp. “However, if India is to grow at an average of 8%+ over the next ten years, a combination of all the four levers will have to come together, and create a Goldilocks scenario,” analysts said. According to their estimates, along with increasing investment rate and labor participation to previous peak levels, an increase in TFP growth by 50bp to 3%, and higher human capital growth at 1.3%, could together increase potential growth to 8.2% (average) over the next 10 years.

India’s potential growth over the next decade could be around 6 per cent. However, the nation can increase this growth to 6.7 and even 8.2 per cent through a combination of increased labor participation and investment rate, said Goldman Sachs in a report. India can increase potential growth by any, or a combination of four levers including; increasing investment to GDP ratio, higher investment in human capital, labor force participation rate (LFPR) increase and productivity (TFP) growth. These levers by themselves can each boost potential growth by 50 bp to 100 bps over the next ten years. For India to grow at an even faster pace, increasing productivity growth is going to be critical, analysts said in the report.

According to the analysts, increasing investment to GDP ratio to the previous peak level of around 40% can alone boost potential growth by 50bp. If the labor force participation rate (LFPR) can be brought back to the previous peak level of 61%, it can boost potential growth by 100bp. “However, if India is to grow at an average of 8%+ over the next ten years, a combination of all the four levers will have to come together, and create a Goldilocks scenario,” analysts said. According to their estimates, along with increasing investment rate and labor participation to previous peak levels, an increase in TFP growth by 50bp to 3%, and higher human capital growth at 1.3%, could together increase potential growth to 8.2% (average) over the next 10 years.

https://www.financialexpress.com/economy/india-may-grow-at-8-2-over-next-decade-goldman-sachs-chalks-out-4-growth-levers/2622997/?utm_source=newzmate&utm_medium=email&utm_campaign=femain&pnespid=Aew1_hxXsCMVyQ_Y9ZyOB1xB_Rhm3r1_9gtOEvwAKovK67.8BvhI_1wSdjlySq7Cz.deR3rh