Finally, India has its own age cohort to flaunt. America's had a few, such as the baby-boomers from the '60s and the Vietnam generation of Flower Children. We did too. The midnight's children, for one. But the time has come to usher in the Liberalisation Children, characterised by a complete absence of guilt about making money and spending it. As such, they may not wait to be ushered in. They could simply walk in and take over.
You would find a statistic sprayed all over this Outlook
issue: 54 per cent of our population is below 25. Here is some more. Forty-five per cent of the population is below 19. Even the oldest of them were just seven when liberalisation happened. Six out of 10 households have at least one Liberalisation Child.
In the next four to eight years, they'll hopefully become earning hands and influence household decisions. "This is the first non-socialist market economy generation, growing up in the thick of the information revolution, the connectivity boom, coalition politics, IT-enabled everything and the rise of the service economy. As this age cohort wends its way through life, it will be shaping markets," says Mumbai-based market strategy consultant Rama Bijapurkar.
India's young demography is already being acknowledged on the global stage. A recent Goldman Sachs study, 'Dreaming with brics: The Path to 2050', predicts that India will be the third largest economy after the US and China in 30 years. The report deems that India's working age population will continue to grow and stay at the peak for over a decade in the 2020s and 2030s before eventually declining. China's, conversely, will peak sooner, decline sharply thereafter.
In the same period, many OECD countries will face workforce shortages. That will hurt both productivity and growth unless these countries outsource more and more economic activity to locations where skilled and young manpower is abundant—very much the way to define India, which will have about 325 million people in the 25-35 age group by 2020. "High growth in East Asia coincided with the high percentage of working age population," points out Subir V. Gokarn, chief economist, Crisil Centre for Economic Research.
No surprises then that the National Council for Applied Economic Research (NCAER) says India will have 462 million people in the consuming and the very rich classes in 2006-07 with another 472 million as climbers, compared to 281 million in the first two categories and 429 million in the third during 2001-02. A high 70.5 per cent of our population will be 'middle income' in 2006-07 compared to 56.7 per cent in 1999-2000; the 'high income' group will rise to 11.7 per cent from 6.9 per cent.
Even as the Liberalisation Children boost economic growth, their defining characteristic would be consumption, due to factors ranging from the factual to the abstract. Even at a 6 per cent compounded annual growth based on purchasing power parity, market size will rise from $1,500 billion today to $2,700 billion by 2010 and $3,400 billion by 2015.
"We'll be creating a huge market for all goods and services. It's a big-ticket opportunity," says Sunil K. Sinha, a consultant with NCAER. That market is already taking shape, as reflected in the forever rising demand for cellphones, TVs, cars, consumer credit, and other symbols of rising income. Promoting consumption would be factors like declining rates of consumer finance.
However, the mindset of the Liberalisation Children would be vital. This generation is different from any before it because it has not seen the self-sacrifice of socialism, thinks of bank nationalisation and Emergency as pre-historic events, feasts on an atrociously large number of TV channels, and chats instead of conversing.It has not seen much of stability, in jobs or politics, and is happy without it.
Assuming a household head's age to be between 25 and 50 (before and after they would be dependent on someone), about half the households in 2025 would have a Liberalisation Child as its head. As they get the baton, or rather grab it, even the other 50 per cent would be dragged along. This will lead to a huge shift in consumer behaviour. For instance, the Liberalisation Children would have a totally different attitude to consumption vs saving, accessing credit vs living within your means, consumption priorities, and the difference between necessity and luxury. A similar shift will happen in business to business transactions as more and more companies get Liberalisation Children as CEOs. "There is a transition taking place from Nehruvian brahmins to Naiduvian banias, destiny-driven to destination-driven, inward- to outward-focused, government-employed to self-employed, stuck-in-my-station-in-life to upwardly mobile," says Bijapurkar.
This story is not about urban India alone. Already, the share of consumption expenditure of rural India on food items has decreased from 73 per cent 30 years ago to 59 per cent. Rural India has reduced its dependence on agriculture. A little less than half of rural gdp is from non-agricultural activities. This is creating a different kind of rural market. NCAER occupation data shows a decline in cultivators; there is enough evidence of dual sector households. With increased telephonic connectivity and the plan to build dependable round-the-year rural roads, rural India will join the mainstream sooner than later.
So, is India about to live up to its promise of a burgeoning middle class that lured MNCs and other investors in droves in the mid-1990s; a promise that is now little more than a joke? For that to fulfil itself, the policymakers will have to demonstrate rare vision in education and job creation.
Some concrete evidence has come to light to support what we've all known all along: there is something wrong with our education system. The government's taskforce on employment, headed by Planning Commission member S.P. Gupta, has found that nearly 60 per cent of the unemployed are educated, having done Class 10 or above, of which 80 per cent are in the 19-29 age bracket. "The young population is a treasure provided they get not only proper education but also jobs. We need much more vocational studies," says Gupta.
It won't be easy. The onus used to be on the government and the public sector. However, even as the new order of private enterprise has come up, there is little evidence of substantial job creation. On the contrary, cost cutting and workforce rationalisation are the order of the day. To compound matters, India has missed out on the manufacturing boom that enabled East Asia to have a vast section of the working population migrate from agriculture to industry.
Policymakers ought to realise that education and jobs are not optional but imperative. "A lack of job creation may find a manifestation in politics and stall reforms," warns Gokarn. Says Sunil Khilnani, professor of politics at the School of Advanced International Studies in Washington, DC: "If that vast population (ready to enter the working age population) is not given education and jobs, it can create a potentially volatile situation. We have seen that happening in the West Asia, where a similar demographic led to a politics of extremism." Ominous or promising? Take your pick.
All About The Zippies
APJ Abdul Kalam
'500 Million Young Will Transform India' ! Azim Premji:
Is On The Wall: Get The A,B,C Right ! Paromita Shastri
Shoots ! Suveen K. Sinha
Of The Zippie ! Anil Thakraney:
To Gorakhpur With All Guns Blazing ! Manu Joseph:
Generation Why ! Velu Shankar:
Bubble Wrap Cocoons ! Ajith Pillai:
Down? Who? ! Sanghamitra Chakraborty:
Next Stage Of Human Evolution ! Indrajit Hazra:
Genius'? Keep The Tag Intact ! Anil Ambani:
You Dream, You Can Do It" ! Saumya Roy:
Chawl And Mall Sanjoy Chatterjee:
World Is My Oyster ! Zippies:
They Want ! Javed and Farhan Akhtar:
All Have Our Struggles' ! Sadanand Menon:
Cow Disease Of Self-Consumption