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Title: India's Economic Growth: Demographic Dividend or Bubble? Not long ago, the official department of India released India's economic data for the second quarter of this year, and it is remarkable that in the first quarter of fiscal year 2024, that is, April ~ June, India's GDP growth rate was as high as 7.8%. The figure, which is India's highest growth rate in nearly four quarters, seems to indicate that the country's economy is rejuvenated and full of confidence. However, let's dive into whether India can really rely on the demographic dividend to continue to prosper, and the challenges it faces.
There has long been concern about when India will be able to surpass China, and some even believe that in some respects India is ahead of China. For example, Mumbai is considered to have long surpassed Shanghai, and some people jokingly call Shanghai the "Mumbai of China". According to the official forecast of the United Nations Population Division, India's population surpassed China for the first time in April this year to become the world's most populous country. However, this is not necessarily a good thing, because a large number of people does not necessarily mean that the country is strong, and a large number of people may lead to an increase in the burden on the country. In terms of total GDP alone, India's GDP is less than 1/5 of China's. Given GDP per capita, India is only 19% of China's, and the gap between rich and poor within India keeps people at the bottom living in poverty.
The Indian government claims that population growth will bring a demographic dividend, but is this the case? Why has India not had a significant demographic dividend over the past few decades, despite its population growth? This is because the demographic dividend depends not only on the size of the population, but also on a sufficient number of working-age people, as well as an improvement in education and skills. In addition, countries need to have the right level of infrastructure to support the workforce. However, there are still huge gaps in education and infrastructure in India, which hinder the realization of the demographic dividend.
Although quarterly GDP growth is as high as 7.8%, this does not mean that India has achieved a demographic dividend. India's economic growth is volatile and not at the level of a large economic power. For example, in April~June 2020, India's GDP fell by 23.9% year-on-year, directly losing one-quarter of economic output. Getting back to 100% requires four consecutive years of year-on-year growth of 7.8%. In addition, inflation in India remains high, with the CPI rising at 7.44% in July, the highest in nearly 15 months, and is expected to remain above 6% until October. If issues such as education, infrastructure and inflation cannot be addressed, India will face great challenges in enjoying the demographic dividend.
In conclusion, India's economic growth is encouraging, but to achieve sustained prosperity, the Indian government needs to focus on key issues such as education, infrastructure and inflation. The demographic dividend may be a potential opportunity, but India has a lot of work to do to make the most of it. At the same time, we need to think about how other countries can respond to similar challenges and play a greater role in the global economy. The need to pursue not only growth, but also sustainable and inclusive development is something that India and other countries need to think about.
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