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World @ 8 Billion | For India, it is about rising median age

Population ageing will have implications on economic growth rates, labour force participation, and brands. For the last three decades, the dominant mantra for brands has been: get the youth hooked. This may have to change

November 15, 2022 / 01:50 PM IST
Representative image.
(Image: AP/File)

Representative image. (Image: AP/File)

The world’s population crossed eight billion on November 15. About 17.8 percent, nearly one six of these people live in India. That’s a very high number, even though India’s annual population growth has been declining, and is now growing at less than 1 percent.

Over the last three decades or so, India’s young demographics has been a well-documented global story. With better spending ability they will decide on products — style, utility, need and affordability. This is where the market has been, and will be.

But, is it really the case? Let’s take a closer look.

The median age of India is now 28.4 years, compared to the world median age of 30. India is young, but not that young after all. This is set to change even further in the next decade. India is set to add 130 million more to the 35+ age group, implying a proportionate decline in the 18-35 age group, which has been the pillar of India’s demographic dividend.

The median age in India is projected to move to 31.7 by 2030. From a socio-demographic point of view, the median age is a very crucial metric as it serves as the most important single indicator of the age distribution of a population. Simply put, the median age gives the ‘midpoint’ of a population: there are the same number of people who are older than the median age as there are younger than it.

So, a median age of 31.7 in 2030 for India would imply that half of the projected 1.5 billion population would be above 31.7 years of age. The global average median age was 30 years in 2021 – half of the world population were older than 30 years, and half were younger. Japan had one of the highest median ages at 48.4 years. One of the youngest was Niger at 14.5 years.

From India’s point of view, this will have implications for companies, brands, and policymakers too. For instance, for the last three decades, the dominant mantra for brands has been: get the youth hooked. Product and services companies have got accustomed to the default assumption that older people are outdated and boring. So, brands have been wary of wooing them directly.

That will have to change, given the demographic transformation that is taking place, the target customer is soon becoming an older, more mature person. Companies will have to tailor their products and services more for the 35+ cohort rather than that continued focus on Gen X,Y, and Z. The Gen X, Y and Z (those born around 2000), after all, will too get older and inch towards their thirties.

Population ageing will also have implications from an economic policymaking point of view ranging from impact on economic growth rates, labour force participation, educational, and healthcare services, and housing markets among others.

A relatively large share of economically ‘dependents’ to those in the working-age bracket can have negative impacts for labour productivity, capital formation, and savings rates.

A paper by Misbah Tanveer Choudhry, Enrico Marelli, and Marcello Signorelli has found strong empirical evidence in favour of the hypothesis that the age composition of population matters for labour productivity growth.

Demographers express the share of the dependent age-groups using a metric called the ‘age dependency ratio’. This measures the ratio between ‘dependents’ (the sum of young and old) to the working-age population (aged 15 to 64 years old).

It will lower both labour-force participation, and savings rates, thereby raising concerns about a future slowing of economic growth. That said, as David E Bloom, David Canning, and Günther Fink, point out in their paper ‘Implications of population ageing for economic growth’, behavioural responses (including greater female labour-force participation), and policy reforms (including an increase in the legal age of retirement) can mitigate the economic consequences of an older population.

For India, that is inching towards the higher ‘dependency ratio’ of the ageing curve, these are important aspects that need immediate attention as the demographic problem of an increasingly larger share of retired people is not just a statistical phenomenon. It is a real that may call for attention in several matters, including a comprehensive old age pension scheme, and, maybe, a relook at the retirement age.
Gaurav Choudhury is consulting editor, Network18.
first published: Nov 15, 2022 01:49 pm