Can It Get Rich Before It Gets Old?
Picture a factory with a thousand workers, all present, all willing, all ready to work. The raw material has arrived. The demand exists. But half the machines are idle, most workers are doing jobs that do not match their skills, and nobody has a clear plan for the batch joining next year. That, in miniature, is India’s economic problem today. Over 68% of India’s 1.46 billion people are of working age, a demographic advantage no other major economy currently enjoys. Yet the average Indian earns a fraction of what a counterpart in China, Malaysia or Vietnam takes home.
The country has the people. It does not yet have the system that turns a large workforce into a wealthy one. This window, the years when a country has more workers than dependents, opens only once in a nation’s history, and it does not return. India is already partway through it. For anyone tracking where growth, jobs and consumption in India are headed over the next two decades, this single fact matters more than most quarterly data points: how India uses this window will decide whether the country closes this chapter rich, or simply older.
In this edition:
1. The first 9,000 The Clock Is Ticking: India’s Dividend Window
2. Young Today, Grey Tomorrow
3. 100 Indians, 53 Jobs: The Labour Force Leak
4. Working Hard, Earning Little: The Productivity Puzzle
5. Fewer Babies, Same Old Problems: The Fertility Paradox
1. The Clock Is Ticking: India’s Dividend Window
A demographic dividend is a one-time gift. For a few decades, a country has more working-age people than dependents, children and the elderly, which means more people earning, saving, spending and investing at once. Capital becomes cheaper, consumption rises, and growth becomes easier to sustain. It also never repeats. India’s broader demographic transition began around 2005, when the country’s percapita income stood near $710. The United Nations pins the core “high dividend” phase, when the dependency ratio is at its most favourable, at 2018 to 2055, a 37-year run. India is already roughly a fifth of the way through it. The comparison with other economies is instructive. Japan’s window ran from 1964 to 2004 and it closed that chapter as a rich nation. China’s ran from 1994 to 2031, already winding down, and it is closing as an upper-middle-income economy. Both had decades to build the industrial base that let them cash in on their dividend before it expired. India’s window is roughly as long, but its starting line is different: it wants to close the era at a per-capita income nearly six times higher than where China started its own equivalent stretch. A higher bar, on a similar clock, though the IMF’s latest 6.4–6.5% growth forecast for India, the fastest among major economies, suggests the run has begun on reasonable footing.
2. Young Today, Grey Tomorrow
For now, the numbers are on India’s side. The median Indian is 28.8 years old in 2025, younger than China (40.1), Russia (40.3), the UK (40.1), the US (38.5) and, by a wide margin, Japan (49.8). India is the youngest large economy on the planet today. But “young” is a moving target. In ten years, India’s median age climbs to roughly 33. The population pyramid tells the same story from a different angle: in 2011, India’s age structure was a wide-based pyramid, stacked with children and young workers. By 2051, projections show it thinning into a column, fewer young entrants, a growing base of citizens over 60, and a healthcare and elder-care system that will need to expand quickly to keep pace. India is projected to have more elderly citizens than children by around 2050. None of this is a crisis today. It is a countdown. Every year the window stays open without full use is a year that does not come back.
3. 100 Indians, 53 Jobs: The Labour Force Leak
India’s problem is not a shortage of working-age people, it is how few of them are actually working. Of every 100 Indians, 68 are of working age. Of those, only 55 are in the labour force at all, either employed or actively looking. And of that 55, only 53 are actually employed. Look closer at who is missing work, and a sharper pattern appears. The national unemployment rate is a modest 4–5%, lower than China’s headline number. But 83% of India’s unemployed are between 15 and 34, and 65% have at least a secondary education. India’s unemployment problem is concentrated among the young and the qualified, not the unskilled. The reason is structural. Someone without formal education can find work on a farm or in the informal economy almost immediately. The formal sector, organised private companies and government jobs, creates only 5 to 6 million jobs a year, while 7 to 8 million people enter the workforce annually. The backlog of unemployed young people now stands at roughly 37 million. Around 80–90% of all Indian jobs are informal, and 42% of the workforce still works in agriculture, a sector that contributes only 15–18% of GDP. That mismatch, more than the headline jobless rate, is the number worth watching.
4. Working Hard, Earning Little: The Productivity Puzzle
Even the Indians who are working are not generating much economic output per hour, relative to global peers. On a chart of output per hour worked, the US and Germany sit near $90; South Korea and Japan cluster in the $45–50 range; India remains near the bottom, a fraction of China’s level, which itself trails the developed economies by a wide margin. History offers a playbook, and India has not fully run it yet. When China entered its own dividend window, 80% of its population lived below the poverty line, yet the government built rural manufacturing hubs that created 100 million non-farm jobs in just 13 years. South Korea directed state credit toward specific industries: Samsung, founded as a trading company in 1938, made its first semiconductor in 1984 and today accounts for 22% of the country’s GDP, while Korea spends 5.32% of GDP on R&D, the highest of any major economy. Taiwan built a direct pipeline from university research to industry, producing TSMC, now roughly 70% of the global semiconductor foundry market. India has its own green shoots. The PLI scheme has generated over 12 lakh jobs, and MSMEs employ 110 million people, contributing 30% of GDP and 45% of exports. But the median Indian firm employs just 18 workers, against 134 in China. Small firms rarely invest in the automation, training and process upgrades that raise wages over time, which is exactly where the next phase of this story needs to be written.
5. Fewer Babies, Same Old Problems: The Fertility Paradox
Here is the twist that has caught the attention of commentators well beyond India’s borders: the country’s fertility rate has already dropped below the replacement level of 2.1, to 1.9 in 2024, according to the government’s own Sample Registration System report, the fifth straight year it has stayed under that mark. Delhi’s fertility rate, at 1.2, is now lower than Finland’s. Bihar, the last state expected to cross the replacement threshold, still sits at 2.9. Zerodha co-founder Nithin Kamath flagged this trend recently, noting that by 2039, every Indian state is projected to fall below replacement fertility, and that fertility is tightly linked to income and education, poorer, less-educated regions tend to have more children, and vice versa, widening the gap between a prosperous South and a stillcatching-up North. Elon Musk, commenting on the same underlying data, pointed out that fertility has been below replacement among India’s most educated citizens for years already. The unusual part is the timing. When the United States’ fertility rate fell below 2.0 in 2010, its per-capita income was around $48,643. India is crossing a similar fertility threshold at a small fraction of that income level, a pattern usually associated with wealthy, ageing societies, not one still climbing toward middle income. Rising housing costs, steep school fees and long working hours are already changing how many young Indians think about having children, well before the country has finished getting rich. As one widely shared social post summarised it: a voluntarily controlled population is usually a trait of a developed society — India appears to be facing a developed-world problem while still developing.
The Window Is Still Open
None of this means India’s story is already written in one direction. The country still holds real, usable advantages: over 2 lakh recognised startups, 127 unicorns, and digital public infrastructure , Aadhaar and UPI, that the IMF and World Bank now point to as a model for other developing nations to replicate. The IMF has raised India’s growth forecast to roughly 6.4–6.5% for 2025-26, keeping it the fastest-growing major economy in the world, ahead of both China and the US. What the data actually shows is not a verdict but a punch list: raise women’s workforce participation, currently one of the lowest among major economies and among the biggest under-used levers available; help small firms scale rather than stay small; keep formalsector job creation growing faster than the number of new entrants; and treat the productivity gap, not the population count, as the thing to close. Japan and China each got one shot at this window, and each used it differently, with very different outcomes. India’s version of this story is not finished, it is being written right now, in the factories being built this decade, the women entering the workforce over the next generation, and the firms choosing to scale up instead of staying small. The clock is real. So is the opportunity still sitting in front of it.
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