Understanding the Effects of Demographic Changes on Business in India

To fully understand the impact of demographic changes on the business environment in India, one must first survey demographic changes and understand the impact of these changes. Demography typically entails the makeup of a nation to include general census bureau information, which may include the average age, income, education, life expectancy, GDP, and other important demographic status of the population. This information may influence general business, or how globalization affects a country in a positive or negative manner. How involved a country is in the globalization process may also be influenced by demographic information, and current changes going on in a country’s demographics. This paper will review recent demographic and past statue of the demographics of the population of India, and then analyze how these changes have affected India during the last decade.

Literature Review

In recent years India has underwent many demographic changes, largely in the way of population growth. This may impact India in a very positive way with regard to business and globalization, particularly as new youths enter the career field and the global business market. According to the National Bureau of Asian Research (2011) during the next three years researchers expect India’s population profile to mimic that of China. India will benefit from multiple factors that include more highly educated citizens, and greater access to employment not only within India but globally. This will be particularly true if India’s population expands and includes education as a primary concern moving into the future.

Currently, India is home to approximately 1.2 billion people, as the second largest population center in the world, and second largest democratic nation. India has enjoyed two decades of rapid growth economically, although poverty is still largely problematic within India. According to World Bank reports, approximately 50 percent of the population in India still averages only two dollars each day, although life expectancy is high with most people living more than 65 years old. The life expectancy is India now is what the life expectancy was in the US following WWII. The life expectancy for Indian citizens will likely increase over next two decades, in the event the economic status, health and literacy rates in India continue to prosper. Birth rates in India have fallen quickly during the last two decades, while birth rates are reported at 2.6 live births per woman during her lifetime.

The U.S. Census Bureau, providing data with the UN Population Division (UNPD) suggests that the country has an intervening population growth rate that averages 1.1 percent each year. India will have a population of younger citizens for the next twenty years, with up to 9 percent of its population 65 years or older and "a median age of 31 to 32 years, compared with a median average age of 37 in the United States". In the same time from now the UNPD predicts India’s life expectancy will rise to 70, with 40 percent of India living an urban lifestyle.

Compared with other Asian-Pacific nations, India fares well. China's population count is greater than 1.3 billion people. China is the closest competitor with India in terms of population growth and lifestyle. India is expected to become the next highest, or highest population center in the world in the very near future. This may happen as early as 2025. China’s working citizen population may peak by 2015, at which point China’s population may begin downsizing, and may reduce by as much as half by 2030. India’s working population, however may double by the same timeframe.

Population Percentage Indian Cities

China’s population is also aging rapidly, expected to peak around the same time as the working population peaks, with the median age rising to 43 by approximately 2030; twice as many individuals in China are 65 years or older then they were just 10 years ago (Luther, 2011). With an aging population come many health expenses, and lowered income levels.

Major changes in family structure also come as a result of an aging population. This may explain the higher than average rates of infanticide associated with the Chinese population. Because of this, many more boys than young women are available in China for marriage, or what some have referred to as a "marriage squeeze".

In India, however, business is booming as a result of a younger population, with a median age in the low 30s, and projections expected for this to remain the norm for many decades to come. India’s prospects sound favorable for economic development. China is much more urbanized than India at present; currently only 30 percent of India is urbanized, although estimates suggest this will soon change to 40 percent. This presents some challenges currently with regard to big business. There are other business challenges presented in India, including the lack of solid public health conditions in many areas.

India also lacks mass educational advantage in many areas, which is vital for business growth. India lags far behind China and some other Asian regions with regard to educational achievement in the upper educational tiers. However, India is working on closing the gap in this regard, in order to position itself solidly in the business world. It is important to view these demographics strategically and economically moving forward in the international business market.

In the 1990s, in India, the population growth rate subsided a bit, shrinking from 2.1 percent to 1.9 percent. Population control may have had something to do with this. In China population control among certain populations has always been something of a concern largely due to cost constraints and land constraints. China is a good model comparison to India because it is the country’s closest cousin with regard to demographics. India population will exceed that of China’s. The primary difference as mentioned is the age of India’s population. This is something that will affect business development and growth opportunities in India. The primary population among the growing population in India are youths. 550 million people in India are under 25. According to GMB over 350 million individuals are aged 15 years old or younger; as of 2013-2014 this figure is expected to add a net addition to the working business population of 91 million business consumers aged 25 to 44 years of age, which is a high addition to the net consumer and business base. It is important that India give attention to the education of its youth and the future youth moving into 2030 and beyond. To achieve this training in technology and the forces of globalization and an international market are necessary.

Youths bring much potential to the global market in India. Youths represent advancing knowledge and technological savvy in India, along with "aggression that was not encouraged by earlier, more sober and rigid governmental systems", all vehicles that may prosper business. Youths have the advantage of manufacturing systems and industries that are now booming, and banks that are now more efficient in catering to global and domestic consumers. In addition many private entrepreneurs are investing in India’s business environment, offering youths a “new lease on life”. Shifting job trends in the company encourage self-employment opportunities for youths that are eager to aspire to new opportunities in life also.