Challenges and Opportunities of India's Growing Population on Independence Day

Posted On Sunday, Jan 01, 1950


Once again school children had gathered wearing coloured clothes – some in saffron, white and others in green, which formed our national flag. Despite recent setbacks the Indian Army, Navy and Air Force were at their resplendent best for a special parade and the tiranga was unfurled at the Red Fort for the 67th time.

Last week, on 15th August, 2013; 1.241 billion* people in India celebrated their Independence Day.

Unfortunately for most of us, Independence Day seems to have become just another holiday, back in the year 1947 the scene was quite different. When Pandit Jawaharlal Nehru, our then Prime Minister said "At the stroke of midnight hour, when the world sleeps, India will awake to life and freedom." the crowd roared with joy and exuberance. Sadly this year when our current Prime Minister delivers his I-day speech, people of the 'Free' India, in all probability, will be busy enjoying their sleep.

Does this mean we are no longer grateful of the fact that we are free? Or just that we are in some way losing hope and trust in India and its political leaders?

While the whole world is trying to untangle its economic problems, India too is slowing down; according to NCAER (National Council of Applied Economic Research). With the growth rate declining, the issue of high CAD gets amplified against the backdrop of slowing economy, high fiscal deficit and persistently growing inflation; India’s growth story seems to be, slowly but surely, taking a U-turn.

For the country to get back on the right track, we need to fight its fundamental problems. Ironically, the term 'independence' still remains a subjective thing. There are many grave issues from which our country needs to be liberated. Some of these acute problems are a burgeoning population, poverty, a massive divide between the rich and the poor, a slowing economy, persistent political gridlock, corruption, and the growing violence against women among many more. Unless we don't answer these challenges together, India will not see a sustained rising growth chart.

The brighter side?

India's demographics:

According to the 2011 census India has more than 50% of its population below the age of 25 and more than 65% below the age of 35. It is expected that, in 2020, the average age of an Indian will be 29 years, compared to 37 for China and 48 for Japan; and, by 2030, India's dependency ratio should be just over 0.4. A large workforce creates a window of opportunity to strengthen the economy.

While growth in India has probably hit a decade-low of 5 per cent* in the financial year that ended in March, 2013 the economy has on average grown close to 7.5 percent* annually over the last five years, helped in large part by this demographic dividend. A growing workforce is an advantage for both the manufacturing and services sectors in India. Businesses have access to people that are young and physically fit.

But in order to make the most of this trump card, there is one important ingredient that we need. Prudent liberalization of the economy. It plays a very important role to strengthen the young population of the country. The ongoing economic reforms in India that started in the year 1991, are a gateway to international trade and investments. The fruits of liberalisation reached their peak in 2007, when India recorded its highest GDP growth rate of 9%. With this, India became the second fastest growing major economy in the world, next only to China. But sadly the growth rate has slowed significantly in the first half of 2012. While the India's youthful population is contributing to India's consumption boom, what India needs is to attract sustained foreign inflows in the form of FDI's Today major brands have found their audience in India, top IT giants of the world have their base in India and some of world's biggest banks have their presence in India.

The country's favorable dynamics, accompanied by the population's growing propensity to spend, have bolstered foreign investor's confidence in India; thus growing FII and FDI opportunities for India. Sustained FII and especially FDI inflows play a vital role in the growth of an economy.
Moreover India has a huge potential to grow. However, to make use of this potential, all we need is right reforms and the infrastructure to support the dreams of a young nation that can pull us back from this economic crisis.

*(Data source: Trading Economics, as on the year 2011)

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Above article is authored by Quantum.

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