India is projected to account for 16% of global consumption by 2050, up from 9% in 2023, according to a report by McKinsey Global Institute titled “Dependency and Depopulation: Confronting the Consequences of New Demographic Reality.”
By 2050, only North America, with a projected 17% share, will surpass India’s global consumption share. These estimates are based on purchasing power parity, which adjusts for price differences across countries.
India’s rise in global consumption share is primarily attributed to its young and growing population, alongside increasing incomes. The report also highlights a global demographic shift driven by falling fertility rates in advanced economies, leading to ageing populations.
By 2050, only 26% of the global population will reside in the first-wave regions (those with historically lower fertility rates), a sharp decline from 42% in 1997. The remaining population will be concentrated in later-wave regions, including India, Latin America, West Asia, and Africa, which have experienced fertility rate declines more recently.
India’s role in this demographic transformation is significant. By 2050, India’s labour force will account for two-thirds of global working hours. Emerging markets, particularly later-wave regions, are expected to contribute over half of global consumption within the next 25 years, driven by their younger populations and rising incomes.
The report notes that India’s share of the global population, which stood at 23% in 2023, will decrease to 17% by 2050. However, India’s demographic dividend—a rise in GDP per capita due to an increasing working-age population—added an average of 0.7% to GDP per capita growth between 1997 and 2023.
Significantly, the report underscores the potential impact of increased female workforce participation. It estimates that if India raises its women’s labour force participation rate by 10 percentage points, GDP per capita could increase by 4-5%.
(Inputs from ANI)