Here's why India's population is the envy of economies everywhere

As developed economies around the world face the reality of funding a growing number of retirees, India is just getting to work.

The average age of the country's 1.3 billion people is just 28 years old. This presents a massive opportunity for economic growth as more and more young people enter the workforce.

_{Developed Regions comprise Europe, North America, Australia, New Zealand and Japan. Data sourced from United Nations, Department of Economic and Social Affairs, Population Division (2015).}

 

A recent report by EY forecasts that India's working age population will rise to 869 million by 2020, representing 28% of the world's workforce. To put that in perspective, the entire US labor force is just under 160 million. 

Of course, these demographic shifts have their challenges. Putting all of those people to work will require significant training, job creation, and infrastructure. And India's women, who have historically been underrepresented in the workforce, are now joining the ranks seeking employment.

The government is moving in the right direction managing these shifts, and the rewards of getting it right are enormous.

Benefits of a booming workforce

As India's workforce expands, savings could increase, helping provide an important source of funding for investment. A growing pool of labor could also mean lower wage cost pressures for businesses.

But, most important for the local economy, a growing working population could drive consumption and growth.

These trends are already bearing fruit. Indian household spending rose from $426 billion in 2004 to over $1.17 trillion in 2014, according to World Bank data. If this growth continues alongside the booming workforce, domestic consumers could emerge as major drivers of the Indian economy.

If you're looking to access the Indian market, consider the iShares MSCI India ETF (INDA), or broaden your search to other countries.

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