India demographics

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Published: September 23, 2015 12:17:30 AM

Lower education levels problem area in an otherwise strong growth cycle

India is currently in the middle of the demographic dividend with 47% of the population below 15 years of age. In the 10 years till 2025, the country is expected to add 100 million people to its working age population—according to a recent Macquarie research paper—while it will fall by 29 million in China. The country has the potential to benefit from the virtuous cycle of favourable demographics and dividend boosted savings, leading to higher investment and higher economic growth. However, the challenge will be to create a skilled working age population with enough employment opportunities to exploit.

The worry area is education levels. While 51% of the population will have completed secondary and vocational/tertiary education in 2025, it will be much lower than its peers. Though the 15-64 age group accounts for 66% of the population, the share of total employed in working population was 37% compared to China’s 55%. That can be attributed to lower female participation rates. There is huge scope for growth since the country is under-penetrated in many aspects—insurance, mutual funds, passenger car ownership—of economic growth. So, expect greater sales of cars, smartphones, houses and consumer durables over the next decade. The discretionary consumer spending in the country is expected to rise from $340 billion now to $500 billion by 2025. However, it’s not that India is not ageing; it’s growing older slowly. By 2025, a third of the population will be over 40 years.

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