Vijay Kumar Gaba

 The “Young India” may soon begin to age. As the era of demographic dividend wanes, many new business and investment opportunities may arise. It may be the right time for investors to anticipate these opportunities and begin taking positions.

Presently, India is home to the largest number of youth. With close to half of her 1.4bn people below 24yrs of age, India is like a vast reservoir of youthful energy. However, this distinction might not last for long. India is expected to become a middle aged country in next 15years and an old country by 2050 - since with the faster economic development over past three decades, India has managed a consistent decline in crude birth rate (CBR), total fertility rate (TFR) & infant mortality rate (IMR); and improved healthcare facilities, better access & improved affordability have also resulted in a consistent rise in life expectancy of an average Indian to about 70yrs.

As per a 2019 report of the Technical Group on Population Projections for India and States 2011-2036, set up the Government of India, the below 24yr population is expected to fall from 50.1 percent in 2011 to 34.7 percent by 2036. The average age of Indians is expected to be of 34.7 years in 2036 as compared to 24.9 years in last census (2011).

TFR is expected to decline to 1.73 by 2036, much below the ideal replacement TFR of 2.0. This implies that Indian population will begin to grow “old” at a faster rate. Over the next 15yrs, the population of India is likely to witness material rise in the number of old people (60yr and above) and number of potential workers (15 to 59yrs), while the school going children (5-14yrs) will decline materially.

By 2036, the share of old people in the total population may increase to 15 percent (230 million) from 8.4 percent (100 million) in 2011; the number of potential workers is expected to rise to 65.1 percent from 60.7 percent in 2011; and the school going population may decline to 14.9 percent from 19.3 percent in 2011.

It is critical to note that the regional demographic imbalances shall continue to exacerbate in future. By 2036, about 23 percent of the population in southern state of Kerala may be old, as compared to just 12 per cent in northern state of Uttar Pradesh. The median age in the Eastern State of Bihar is expected to be 28.1yrs in 2036 (19.9yrs in 2011), while in the southern state of Tamil Nadu, it would be 40.5yrs (29.9yrs in 2011). Andhra Pradesh may have a CBR of 9.9 per thousand in 2036 (15.2 in 2011) whereas Bihar’s CBR may be 19.6 (27.5 in 2011).

With the projected rise in population to 151bn by 2036, the density of population shall also increase to 462 people per square kilometer from the present 368 people per square kilometer. This shall lead to further acceleration in the trend of urbanization of India. Of course, the urbanization trend will not be uniform across India. Delhi and Kerala will lead with 93-100 percent urbanization rate, with Tamil Nadu, Telangana, Gujarat, Maharashtra, Karanataka etc following with 50-60 percent; whereas Himachal, Bihar, Assam and Odisha will lag with 10-20 percent urbanization rate.

With the decline in number of school going children, the focus will shift from primary and secondary education to higher education and skill building. Beside more parents will be available for working. Skilling and managing this new set of workers could be a good business opportunity.

The global experience suggests that rise in middle ages urbanized working population invariably results in rise in demand for civic amenities like housing, public transport, sanitation, communication etc.; recreational activities like entertainment and travel; personal use items like clothing, footwear, cosmetics and fashion accessories; and consumer durables etc. Rise in demand for healthcare, social & financial security, elderly care etc. is a natural corollary of the aging demography. The age related pharmaceuticals and devices, chronic disease management, pension management, nursing care, estate planning, old age homes, usually see significant rise in demand as the demographics shift to the higher age. Obviously, we shall see sustainable investment opportunities arising in these areas over the course of next few decades.

Personally, I believe that the demographic shift in India offers immense opportunities in the financial services segment. The demographic changes shall inevitably result in significant widening and deepening of the financial services. With the evolution of earning, savings and spending patterns, the financial product mix, design and their delivery will also have to evolve. Significant opportunity shall arise in the businesses like financial planning, lending, insurance, asset management, etc.