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08 Jan 2020 by Harsh Ashar
How Young Indians Will Help India Grow?

India is well-placed to become a $5 trillion economy by 2025. Perhaps, we all know this, right? But what if I tell you, that the young Indians would primarily drive this growth. Surprised?

Before I come to how, let me tell you quick facts.

  • India is a country with 450 million millennial out of 1.3 billion population. This means, 35% of the population are millennials. Now, millennial are anyone who is born between the years 1981 and 1996.
  • As per the report by Niti Aayog, Strategy for New India @ 75 and McKinsey Global Institute, around 18% of the global population lives in India.
  • India has the 2nd largest English speaking people in the world, which is just 10% of the total population as of now. It is expected to quadruple in the coming decade.
  • The literacy rate in India has gone up to approximately 80% as compared to 65% in 2001.
  • The unemployment rate was projected at around 3.5% in 2018 by the International Labour Organisation (ILO). By 2027, it estimates that 116 million people would get added to the Indian workforce as compared to only 467 million people worldwide.

Coming to the most important, by 2022, the median age of India will be just 28 as compared with 37 in China and the U.S., 45 in Western Europe and 49 in Japan.

What does all this mean to Indian economy?

In one of my discussion with Manish Goel, he pointed out, “The key driver for any economy that fosters its growth, sustainability and competitive is demographic dividend. India is still yet to unleash the miracle of this demographic advantage that India has over other economies. Today, there are more than 650 million mobile phone users in India, which makes it a bigger smartphone market when compared to U.S. and second to China. The biggest assets for the country would be human capital and data, and India has both of them.”  Read more on what makes me so bullish on India here

Here are three ways the youth demographics will be key driver of growth in future:

  1. More working population:

  • India boasts of 450 million millennial and 470 million Gen Z kids. That’s a huge number!
  • Out of 1.3 billion population, India's Labour Force Participation Rate stands at 51.8% as on Dec 2019.
  • By 2027, it estimated that 116 million people would get added to the Indian workforce as compared to only 467 million people worldwide.
  • Along with an increase in working population plus favourable median age, India will be able to realize true potential of the demographic dividend that it enjoys.

  1. Education: India produces the maximum number of Science, Technology, Engineering and Mathematics (STEM) graduates.

  2. Sheer scale: No matter how you dissect the market segment of India, you end with the size of another country. Today, there are approximately 300 million smartphone users in India, which is the population of the U.S. Maharashtra population is 114 million which is slightly less than Japan’s population of 126 million. Any company that can tap the majority of any market segment will witness humongous growth in the future!

  3. Increased digital connectivity:
  • India is a land of young population with increased access to internet connectivity.
  • Today, there is a humongous size of young, vibrant and diverse millennial with access to data, e-commerce and social networks. This unparalleled growth in internet connectivity and data has led the Indian economy towards becoming the second-largest digital consumer base in the world.
  • 650 million mobile phone users, out of 300 million are smart phone users. Young people with smartphones means: buy, buy & buy!
  1. High aspirations:
  • Today, young Indians have more income at their disposal.
  • This will lead to high aspirations among the youth to increase their standard of living– Young Indians would want to travel more, eat better food, shop branded clothes, buy more luxury goods, etc. i.e. resulting to high discretionary spending.
  • This increased discretionary spending will result to higher consumption expenditure among Indian households, which will ultimately drive GDP growth.

Having said this, India also needs to understand that if it wants to leverage on this demographic opportunity, it will have to increase the efficiency of the economy, work towards the digital future as well as focus on improving the quality of education and healthcare facilities in India. Then only, we can genuinely unleash on this magic of human capital to reach the destination of $5 trillion economy. Click here to know more about investment opportunities which will outperform over the next 4-5 years.

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