DELHI (Diya TV) — India’s demographic dividend, characterized by a youthful workforce, presents a significant advantage amid global demographic shifts, according to Morgan Stanley. The brokerage firm highlights India’s projected growth in the working-age population until 2037, positioning it as a key contributor to the global workforce expansion over the next decade.
With India expected to account for 21% of the incremental increase in the global working-age population, Morgan Stanley foresees a dynamic economic landscape driven by manufacturing, exports, and capital expenditure (capex). This trajectory, coupled with ongoing policy reforms aimed at fostering manufacturing-led growth, underscores the potential for substantial employment generation in the coming years.
Over the past four years, policymakers have pivoted towards promoting capex and manufacturing, signaling a strategic shift in India’s growth narrative. This strategic emphasis is poised to reshape the labor force landscape, paving the way for enhanced productivity and competitiveness.
Morgan Stanley underscores the need to unleash labor productivity, citing India’s high informality rate in the labor force, with nearly 89.1% engaged in the informal sector. Despite agriculture’s predominant role, the economy is witnessing a gradual transition towards formalization, particularly in manufacturing and services.
While India’s wage growth, particularly in the manufacturing sector, remains modest compared to regional peers, there has been a gradual improvement in labor productivity. As the economy progresses towards formalization, fueled by a burgeoning manufacturing and services sector, Morgan Stanley anticipates a notable upswing in labor productivity.
The confluence of demographic trends and policy reforms positions India favorably in a global context, offering a beacon of growth amid demographic challenges faced by other major economies. As India harnesses its demographic dividend and embarks on a trajectory of manufacturing-led growth, the stage is set for sustained economic expansion and heightened competitiveness on the global stage.
