Representational image. IIT Kanpur has launched a project to teach children in rural Uttar Pradesh through online smart classrooms (Pic. Courtesy digitallearning.eletsonline.com)
Can India, with a growing young population bank on a consumption boom to support its economy. Yes, if it plays its cards well. According to Worlddata, the median ages of people in the US and China are 38.5 and 38.4 respectively. Contrast this with India. The number is 28.7.
For most of the European nations including Germany, UK, Italy, Spain and France among others, the median age of population is over 40. Japan tops the global chart with a median age of 48.6 years.
Brookings, in a recent study, said that India’s consumer-class growth will be among young people, while China will predominantly add consumers above the age of 45. By 2030, India will be home to 357 million young consumers below 30 years of age, the largest “young consumer market” in the world.
“India gets a lot of its GDP from domestic consumption. So even if the world would slow down for a few months, India has a natural cushion by the fact that it is more domestic consumption oriented,” World Bank President Ajay Banga, who is currently in India, said.
Banga earlier noted that he is “more optimistic about India today as a whole” than he was earlier.
India’s renewed thrust on reforms and infrastructure development is expected to create jobs and improve income levels.
The Brookings study pointed out that though China’s main consumer class is urban centric and more affluent, the country was already the largest “senior market in the world” in terms of people. In terms of spending the US is in the top slot.
The study added that by 2030, India will be home to one-fifth of the world’s youth consumer market while China will represent one-fourth of the senior market by that time.
China domestic demand is starting to show signs of sluggishness, causing concerns for policymakers as the country is now aggressively looking to shift to consumption-led growth instead of investment-led economic expansion.
Meanwhile, the consumption level in India, too, has not picked up significantly. This could be due to economic uncertainties arising after the unseasonal rains, an analyst told India Narrative. In June, India’s retail sales growth stood at 7 per cent, same as May. In March and April the growth was 6 per cent.
However, New Delhi is not overtly worried as yet. The festive season, which will kick in by September, is expected to boost demand and consumption, the analyst said.
The Asian Development Bank (ADB) in its just released Asian Development Outlook has retained India’s growth rate for the financial year 2024 at 6.4 per cent. Growth, according to the multilateral lender will be driven by recovery in consumption demand in both rural and urban areas. For China, the projected growth rate is 5 per cent.