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India
Anirudha Dutta
Ongoing talk of India’s demographic dividend is easy to understand: the country recently overtook China as the world’s most populous country and over the next 20 to 25 years, is set to become the largest contributor to the global working age cohort.
India has already become the world’s most populous country
Source: United Nations, World Populations Prospects (2024). Projections from 2024 onwards are based on the UN’s high scenario.
At present, 43% of India’s population is below 25 years old and its median age is just below 29, with the working age number predicted to climb above 1.1 billion by 2040 (equating to 69% of the total)1. Per capita GDP is expected to rise, doubling to $5000 in the next decade2, and that will be a major driver of consumption, with discretionary spending likely to rise faster than staples.
For Capital Group’s India specialist Anirudha Dutta, however, good jobs are a challenge for India, as is attracting young people to the manufacturing sector without a reset in wages.
While India created 169 million new jobs between 2018 and 2024, 78% of the incremental employment is in agriculture (52%), construction (13%) and trade, hotels and restaurants (13%). Furthermore, 75% of the new employment was self-employed and an additional 6% are casual labourers.
“If India is unable to gainfully employ its youth and meet their aspirations, then social unrest is a risk and the demographic dividend may well turn into a nightmare,” adds Dutta.
“There are other challenges – deglobalisation, reshoring, climate change, technology advancements, AI and automation, as well as internal issues like the north-south divide, and poor education, skilling and healthcare outcomes. None of these, in itself, will derail the India story but they can certainly cause a dent.”
1. Source: United Nations Development Programme forecasts, Capital Group
2. Source: ICE 360 Survey, Capital Group
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