India’s Demographics – Dividends and Challenges

Let’s learn a bit about India’s demographic Dividend and Challenges.

India will have the largest population of the world within the next 2 decades, with 60% of the population in the age group of 15-60 years (The working age group) for the next 3 decades. This means nearly 80-90 crore people!

Imagine the consumption boom if we can continue to provide jobs to this group. That is the reason anything B2C in India is able to thrive and get great valuations in the equity markets. HUL, DMart, Titan, Asian Paints, any B2C startup are examples of this.

Is this the complete story?

However, the story is incomplete without looking at the possibilities.

Remember, this is the age group that CAN work. It does not mean they are working today.

– Out of the 80 crore people in the working age group, less than 50 crore work today (low labor force participation). One major reason here is very low female labor force participation rates

– Of the 50 cr who work, nearly 45% are in Agriculture, while Agri produces only 17-18% of India’s GDP

– Of the remaining 26-28 cr employed in Non-Agri segment, nearly 85% are in informal jobs

Only 4-5 crore people work in formal jobs. This needs to change.

What can we do?

3 possible solutions could be looked at.

– Creating more opportunities for women to join the workforce

– Either Agri output increases, or more Non-Agri jobs have to come up. We can’t have 45% of our workforce generating just 17% of the GDP

– A manufacturing boost will result in more formal jobs

Imagine the growth possibility if we can increase the workforce participation and formal jobs by 10-20% each.

 

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That is it from us this week. Till next week.