Sunday, January 7, 2007

Indian Demographics

I recently came across a statistic that astounded me: the median age in India is 27. In fact, 75% of the population is younger than 35 today. Is anyone else surprised at how incredibly *young* Indians are?

Thinking about the ramifications of this reminded me of the famous BRIC report released by Goldman Sachs in 2003. If you're not familiar with it, BRIC is Brazil, Russia, India and China, which represent the largest emerging economies in the world today. The report caused quite a stir when it was released because of these predictions:
  • In less than 40 years, the BRICs economies together could be larger than theG6 in US dollar terms. (They were worth less than 15% in 2003).
  • Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050.
The graph below neatly shows when each of the BRIC countries overtakes the current G6 economies.

In the three years since the study came out, their projections look to be conservative, if anything. Growth rates in India and China have been far higher than their assumed rate during the period from 2000 - 2005.

The reason I bring up this study is that India's demographics are cited as a key reason for India's high growth. India is the only country projected to grow at above 5% for the entire period of the projection (upto 2050). This means a per-capita income of over 35 times what it is today. However, India is still projected to have a significantly lower per-capita income than the other BRIC countries, even in 2050.

The report is a great read and still very topical, even though its now three years old.