Synopsis
McKinsey Global Institute, in its report “Dependency and depopulation? Confronting the consequences of a new demographic reality”, released on Wednesday, said India needs to increase the relatively low participation of its citizens in labour markets and sustain fast productivity growth to “get rich before it gets old”. Getty Images The report projects India will hold 16% share in global consumption in 2050 compared to 9% today while shares in advanced economies are expected to be flat or declining. India needs to increase the relatively low participation of its citizens in labour markets and sustain fast productivity growth as the country has just 33 years until it is as “old” as advanced economies, McKinsey Global Institute said in its report on Wednesday.
“India still has some time to benefit from its demographic dividend for economic growth but is aging faster than many realize,” McKinsey Global Institute said in its report ‘Dependency and depopulation? Confronting the consequences of a new demographic reality’.
“Despite very fast progress, India is still a low-income country, so it needs to “get rich before it gets old,” it added.
According to the report, India is projected to reach the same support ratio (number of working-age individuals per senior 65 or older) in the 2050s as seen in advanced economies but its GDP per capita is just 18% of the World Bank’s high-income threshold today.
“The first consequence of India’s demographic shift will be slower economic growth,” it said.
McKinsey Global Institute said India’s beneficial demographics added 0.7 percentage points per year to GDP per capita growth from 1997 to 2023. “Through 2050, that advantage will shrink to just
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