India is estimated to become the most populous country in 2023, and its population is projected to increase by around 240 million over the next 25 years. The implications of this growth in population on the economy are multifaceted.
On one side, as the population grows, there will be increased demand for goods and services. Over the last decade, the size of India’s consumer market nearly doubled to US$2.1 trillion, and it has progressed from being the tenth-largest consumer market to the fourth-largest one in the world today. By 2047, India’s consumer market has the potential to be nine times its current size, at US$18.5 trillion, behind only the U.S. and China.
Conversely, population growth creates enormous pressure on the labor market. By 2047, India will have 1.1 billion people in the working age group (15-64), which equates to 1.6 times the entire population of Europe. Despite steady economic growth, India will not be able to provide employment opportunities to all the young people entering its workforce.
The Jobs Imperative
India needs to generate 231 million jobs over the next 25 years to:
Support its growing population: Latest available data from the International Labour Organization (ILO) shows that Labour Force Participation Rate (LFPR) stands at 52% in India compared to 73% in the U.S., 76% in China and 78% in the UK. Even if India were to increase its LFPR by one percentage point every year until it reaches a LFPR of 70%, around 95 million non-agricultural jobs will have to be created over the next 25 years considering the rate at which the total population is estimated to increase.
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