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Bharat Amritkaal Series - Biggest Mega Trend - Youngest, largest & aspiring!

Updated: Apr 12

Greetings from Team Carnelian!

 

In our previous letter, we highlighted the major tectonic shifts which are underway, making us believe that India will become a developed country during the Amritkaal period. In this letter, furthering our belief we have focused on some of the emerging mega trends which will propel structural changes across 5 sectors.

 

"Mega trends are nothing but the untold possibilities of tomorrow, waiting to be deciphered by those who dare to understand."

 

Mega trends represent fundamental shifts in demographics, technology, societal behaviour that drive significant changes and typically unfold over extended periods, sometimes decades. These trends are structural shifts and have irreversible, outsized consequences for the world around us.  Recognizing and capitalizing on these trends is a very important part in the journey of wealth creation. These mega trends will shape India’s economy and eventually drive wealth creation during Amritkaal.  We will discuss one such mega trend in this letter. 

 

India’s demographic overview:  We all know that India is the most populous country in the world – below is a contextual, fresh & global perspective highlighting its importance:

 

  • With a median age of 28 years, India has the youngest population globally, compared to 38 years for China and The United States, 49 years for Japan, 41 years for The United Kingdom. More importantly, India will continue to remain the youngest nation for the next 5 decades!!! while rest of the world continues to age.

  • 2/3rd of the population will be working class (20-59 years)

  • India will contribute ~25% of the incremental global work force

  • At 31.2%, India’s dependency ratio will be the lowest in its history by 2030.

 

Considering all the above, this mega trend is not only unique to India but also irreversible.

 

What is different this time:

One can argue that India’s demographic dividend is always talked about – so what is different this time? We borrow a concept from physics for this. 

 

There is stationary (stored energy) energy in every object and for it to become kinetic energy, it needs to be triggered by gravity or some other catalyst. Similarly, our youngest and largest working population is like that ball at the top of a hill, which has potential energy due to its height (in this case age) and when a force (tectonic shifts) pushes it down the hill, that potential energy is transformed into kinetic energy, making the ball (population) move faster. It’s this Big Shift we are referring as a Mega Trend.

 

It is India’s ability to create incremental opportunities for its vast working age population across various fields which is game changing. Today India is more confident in dreaming and believing. The animal spirits are getting ignited – one billion plus people’s aspiration are ignited - the amplifying/multiplier impact of this is huge, and we see this as big departure from the past. 

 

Why is it irreversible & more potent:

Demographic structures get created on account of social, culture and policy changes over many decades. It is important to note that our demographic set up is also coinciding with the world getting older including China.

 

~26% of India’s population is below 14 years, ~67% between 15-64 years and 7% above the age of 65.


Developed economies are not only facing shortage of labour availability but also a smaller working-age population relative to the elderly and children has led to increased dependency ratios, meaning there are more non-working individuals dependent on the support of those who are working causing strain on the social welfare systems and government budgets.


India’s nearest and most important competitor as discussed is China and one must take note of the changing social structure in China. China had implemented One Child Policy as a population control measure. The policy restricted couples to only having one child. Over time, while the population came under control with declining birth rates, China's population structure began to shift. Because of the one child policy, one working couple (who themselves are ageing too) have 5-6 dependents (four parents & 1-2 children), causing a huge financial strain in the family. Eventually realizing it’s mistake, China has replaced the One Child Policy with a Two Child Policy, but that’s unlikely to change their demographic structure in the next few decades. It is not easy to change demographic structures.

 

Fortunately, we don’t have to think of this problem for next many years, in fact the youngest

India has the largest pool of graduates with a Science, Technology, Engineering and Mathematics (STEM) background which is English speaking, giving India an edge. India’s success in exporting IT and BPO services is a good example of its potential.

 

Many global large & iconic corporations, have set up GCCs in India, together employed approximately 1.3m people as of FY2021 and are expected to employ ~2-3m people by 2025. For many large global corporations, India has either the largest or the second largest workforce by geography.

 

India’s confident youth is more & more inclined towards entrepreneurship and leading innovation which is a big shift from the past. There is a big shift in the number of Indian students studying abroad returning to India for work and opportunities. All these have huge long term structure impact on India advantage.   

 

Success of this labour force has a multiplier impact on the Indian economy as this workforce is also a large consumer of goods and services and contributes to savings and investments in the Indian economy.


This virtuous cycle of producing more & better and consuming more and better will have a huge multiplier impact on the economy.


It’s this irreversible mega trend which will have overarching impact on every aspect of India’s growth journey and wealth creation potential. 

 

India is the most populous nation on the planet, India is the youngest nation on the planet and India is most aspirational nation on the planet. It is this trilogy coupled with major tectonic shifts will enable many other major emerging mega trends which we discuss in our forthcoming letters to you.

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mnarsaria1
Apr 11

Liked your way of summarizing and linking the facts !

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