Why this PE guru says India could be No. 1 in your lifetime
Rubenstein highlighted that India’s demographic advantage – a younger, growing population compared to aging societies such as China and the US – is at the heart of this potential economic transformation.
Click here to read the full interview
“Well, I would say it could probably happen in 20 to 30 years. India has the advantage of having a younger population. In China, they have an aging population because of the one-child policy and the population is declining. India’s population is growing and a large percentage of the people are young. And while our population in the United States is growing, it’s aging. So I think 20 years from now India could be a dominant economy in the entire world,” Rubenstein said.
His words reflected not just optimism but also the growing global consensus on India’s rising economic trajectory amid structural reforms and changing global dynamics. The Indian economy has become the world’s fourth largest economy, with a nominal GDP of approximately $4.18 trillion, ahead of Japan and behind only the United States, China and Germany.
This shift in global economic rankings is not a stand-alone event, but rather a result of sustained growth over the years, reflecting strong domestic demand, investment flows and expanding manufacturing and service sectors. With continued momentum, India is poised to surpass Germany to become the world’s third largest economy by around 2030, according to official estimates.
Rubenstein’s forecast is based on the assumption that India can reach its peak within two to three decades if it continues its growth trajectory by taking advantage of demographic advantage.Also Read: Budget 2026 could build a Viksit Bharat powerhouse on farms, youth and middle class
India’s decisive advantage
India is one of the youngest major economies in the world today, with 65% of its population estimated to be under 35 years of age. This large, young group contrasts with many advanced economies and even China, where years of low fertility rates and aging demographics have squeezed the workforce.
This demographic profile offers India labor supply, consumption growth and entrepreneurial energy; These are all essential elements of rapid economic growth. The window to fully exploit this demographic dividend is time-dependent: India’s working-age population is expected to grow significantly by the early 2040s, creating a critical decade to translate population advantage into productivity and growth.
However, demographic characteristics alone do not guarantee prosperity. Economists and policy analysts have stressed that India must match its demographic potential with productive employment, skill development and structural economic changes to fully exploit this dividend.
However, demographic characteristics alone do not guarantee prosperity. Economists and policy analysts have stressed that India must match its demographic potential with productive employment, skill development and structural economic changes to fully exploit this dividend. India’s youth population is expected to peak around 2025 and then gradually decline. But India’s working-age population continues to grow until 2041. The next decade is a critical window for India to fully leverage its demographic advantage.
Demographic dividend is also a challenge
The great challenge in India’s economic discourse is also an opportunity; to transform its demographic power into a skilled, productive workforce. Writing in ET recently, HDFC Bank Chief Economist Sakshi Gupta says India’s working-age population is estimated at around 902 million by 2023-24. Approximately 634 million of them are either working or actively looking for work and constitute the active workforce. But almost half of this workforce still depends on agriculture.
“What is striking, and counterintuitive, is that jobs created in the agricultural sector since 2018 have outpaced non-farm activities. For an economy aiming for higher per capita income and productivity, this is a signal that policy should focus on reversing this trend. Between FY 2018 and FY 24, non-farm employment increased by an estimated 76 million, or about 12.6 million jobs per year. But the mix of these jobs matters. Construction and services have done so, heavy lifting, mining and manufacturing Industrial sectors such as recorded a moderate performance.” writes Gupta.
Also Read: How Budget 2026 can transform India’s demographics to growth?
The government’s emphasis on infrastructure has significantly increased construction employment, with nearly 20 million workers added between FY 2018 and FY 24. As a result, construction now employs more people than manufacturing. But Gupta says this reflects a remarkable achievement but also highlights a limitation. Infrastructure-driven growth can create jobs quickly, but cannot meet long-term employment needs on its own. For long-lasting, better-paying jobs, manufacturing will need to take on a much larger role.
Trends in the manufacturing sector vary. Labor-intensive industries such as textiles, food processing and wood-based products continue to employ large numbers of workers, but employment growth in these areas has been relatively slow, Gupta says. In contrast, sectors such as electronics, electrical equipment, chemicals, pharmaceuticals and automobiles expanded faster and showed stronger momentum.
The government is out of business
The government is currently trying to skill India’s youth and create more jobs for them through various measures. “Government programs that tie incentives to job creation in the manufacturing sector could be sharpened to further boost employment. For example, under the current employment-related framework, incentives are capped at relatively modest wage levels. In a high-cost urban environment, raising this cap would make formal manufacturing jobs more attractive to both firms and workers without undermining fiscal discipline,” says Gupta.
MSMEs account for almost half of manufacturing employment, up from 44 percent a few years ago, and have created close to 30 percent of new non-farm jobs in the last seven years. “In many ways, MSMEs are India’s employment wheel. While investment-led incentives such as manufacturing-linked schemes have successfully catalysed capital expenditure, Budget 2026 can complement them by directly rewarding increased job creation by MSMEs. Tax incentives clearly linked to net new jobs (in both manufacturing and services) will be a powerful way to transform job creation into a self-reinforcing cycle of income, consumption and growth,” writes Gupta.
Women’s participation in the workforce is another important factor. Women’s participation in the workforce has increased impressively in recent years, rising to 40.3 percent by 2024, but most of this increase has come from agriculture. Women are underrepresented in non-agricultural sectors.
Demographic dividend needs macro support
Although predictions of India’s economic rise based on its demographic dividend are optimistic, analysts also emphasize that global economic uncertainties, geopolitical negativities and domestic structural bottlenecks may shape the path ahead. Ongoing reforms, particularly in sectors such as manufacturing, technology and labor policy, will be critical to long-term competitiveness. Rubenstein’s claim that India “could become the world’s largest economy” in the next few decades is based on multiple macroeconomic trends, such as strong growth momentum and deepening global integration.
Carleye
