Advantages of India’s Youth Bulge

Why in news?

As global economic growth goes down well below 2% in 2023, India’s economic growth is expected to remain at 5%.

Why is India being viewed as a bright spot in this global downturn?

• Global downturn - A combination of transitory shocks and secular forces has created a highly uncertain future, with the potential for a medium-term global stagnation.
• Global population is getting older rapidly across the group of countries that make up more than 75% of global GDP.
• India as a bright spot - India’s high growth is a reflection of its structural strengths and growth drivers.
• India is a success story on the export of services and services tend to shrink less compared to manufacturing during global economic downturns.
• Global exports of digitally delivered services have more than tripled during the last two decades and India stands out as a winner.

What is the status of India’s youth bulge?

• India’s demographic profile is well positioned to withstand adverse macroeconomic shocks.
• India’s growth will continue to benefit from demographic dividend and youth bulge.
• There is space to borrow from residents and build public private partnerships to finance additional spending on infrastructure.
• India’s domestic savings are rising.

What are the advantages of India’s youth bulge?

• Wage-price spiral - Since the labour force is expanding, young population will avoid the risks of wage-price spiralling upwards.
• Women workforce - The rise in women’s workforce activity naturally accompanies a decline in fertility.
• Savings - Working ages happen to be the prime years for savings, which is key to capital accumulation, creation of infrastructure and technological innovation.
• Retirement - It boosts the savings that occurs as the incentive to save for longer periods of retirement.
• Emergence of middle class - Surveys show a massive shift towards a middle-class society which
  • Is a source of entrepreneurship
  • Is a major contributor to savings and human capital
  • Strengthen the links with education.
  • Relates to consumption

References

1. The Hindu Businessline│Young India is bucking the global downturn
2. Investopedia│ Demographic Dividend