India’s (Bad) Moment

INDIA will soon have a fifth of the world’s working-age population. But many are worried that it is squandering its opportunity. During the boom of the 1990s and 2000s it became fashionable to talk of India’s demographic dividend – evoking the experiences of East Asia. There, working-age populations rose at the same time as the ratio of dependents to workers fell. An associated rise in the rate of saving allowed more investment, helping the vast expansion of manufacturing that employed those workers and lifted hundreds of millions of people out of poverty. India’s fertility rate dropped substantially in the 1980s and 1990s, and its working age population is expected to expand by 125m over the next decade. But now India’s GDP growth rate has fallen to half of its peak rate. The country’s record on job creation has been poor, households are redirecting their savings out of the financial system into physical assets, and manufacturers remain wary of labour rules and infrastructure bottlenecks, says The Economist.

 

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