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Published: May 25, 2010
 / Summer 2010 / Issue 59

 
 

Preparing for a Demographic Dividend

S+B: So as India’s middle class, the largest in the world, starts paying prices that are closer to those in the West, particularly as people’s wages rise, the consumer market in India is going to be one of the biggest opportunities in the world. And that would suggest investing in consumer infrastructure and retail.

KAMINENI: Apollo has 1,000 retail pharmacies. We opened them all in 1,000 days; a drugstore a day. We know retail is going to be a huge opportunity.

I want to give you one last thought that we haven’t touched on. One of the best things about India, culturally, is that we’re very environmentally sensitive, and we’re very frugal. So, whenever we talk about urbanization and its problems, you have to remember that we know about recycling and conserving energy use. So you can’t apply the same factors that would exist in a city in the West to India’s cities.

MALHAN: I think smart money will be invested in inclusive growth. Investors should look at where their money can have a multiplicative effect. In our current situation that means investing in education, vocational training, and entrepreneurship.

The starting point is educational training — and it has to be training that involves the eye, the hand, and the mind. It must also take place across various sectors of the economy, including agriculture.

CRAMPTON: I’d put connectivity as the top priority. With connectivity, you’re going to suddenly find all these scalable solutions that were never available before. The difference between somebody who can get online only a little and someone who cannot get online at all is massive. If you can make it an objective to provide people with connectivity, they will find ways to solve problems before they become big. Solutions will arise that would otherwise have been totally unavailable. Some skill problems may start to solve themselves, as Professor Sugata Mitra of NIIT [an Indian IT training company] in Delhi found after placing a computer in the wall of the institute. Children from the adjoining impoverished neighborhood began teaching themselves how to use computers, and unsupervised computer learning was born. You’ll also find online universities growing to fill a huge portion of the training agenda.

BALAKRISHNAN: If you look at Indian pay rates, they are among the lowest in the world; 30 or 40 rupees [64 to 85 cents] a day, a little more in some sectors. If you can add skills and educate people, they can start earning more and buying more products. Consumerism would encourage more commercial growth and, with domestic demand being so high already — almost 65 percent of our GDP — it would bring a lot of wealth into the bottom of the pyramid.

PRAHALAD: India’s success or growth is going to depend on 800 million ordinary people, not a village. In other words, the bottom of the economic pyramid is a fundamental source of innovation. The final point I want to make is that connectivity, sustainability, environmental stewardship, inclusive growth from the bottom to the top of the pyramid, and globalization are all joined at the hip, yet few people are looking at all of them together. They tend to be viewed as independent pieces, as unique problems that can be addressed separately. But that is not the case. It’s a tall order, but all of them will have to be addressed simultaneously and in a coordinated fashion for India to take advantage of its demographic opportunity.

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Roundtable Contributors:

  • Sudhakar Balakrishnan is CEO of Adecco India, a staffing and human resources services firm based in Bangalore. He was formerly an executive at several Indian companies, including ABC Consultants and Sify.
  • Thomas Crampton is the Asia/Pacific social media strategy director for Ogilvy Public Relations Worldwide, part of WPP PLC. Based in Hong Kong, he was formerly a columnist and correspondent with the International Herald Tribune and the New York Times.
  • Shobana Kamineni is executive director of new initiatives for the Apollo Hospitals Group, which operates 46 hospitals in India and overseas; neighborhood diagnostic clinics; a chain of pharmacies; and divisions involved in medical business process outsourcing, health insurance, and clinical research.
  • Naresh Malhan is managing director of Indian operations for the employment services firm Manpower Services India Private Ltd. He was formerly managing director for marketing and operations at Xerox India and president of the consumer market business unit at Tata Teleservices.
  • C.K. Prahalad passed away on April 16, 2010. He was the Paul and Ruth McCracken Distinguished University Professor of Strategy at the University of Michigan’s Stephen M. Ross School of Business and coauthor of several significant books, including The New Age of Innovation (McGraw-Hill, 2008) and The Fortune at the Bottom of the Pyramid (Wharton School Publishing, 2005).
  • Photographs of the roundtable contributors courtesy of the subjects, with the exception of Shobana Kamineni: © India Today Group/Getty Images
 
 
 
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Resources

  1. David E. Bloom, David Canning, and Jaypee Sevilla, The Demographic Dividend: A New Perspective on the Economic Consequences of Population Change (RAND Corporation, 2003): A review of the effects of demographic change on economic growth.
  2. Thierry Geiger and Sushant Palakurthi Rao, The India Competitiveness Review 2009 (PDF) (World Economic Forum, 2009): An in-depth analysis of India’s current and future ability to compete in the global commercial landscape.
  3. Yoshito Hori, Jean-Pierre Lehmann, Timothy Ma Kam Wah, and Vanessa Wang, “Facing Up to the Demographic Dilemma,” s+b, Spring 2010: At the World Economic Forum’s summer meeting in Dalian, China, four experts discussed the challenges and opportunities that aging populations present to business in emerging Asian countries.
  4. Nandan Nilekani, “India’s Demographic Moment,” s+b, Autumn 2009: The economic force of a burgeoning population.
  5. C.K. Prahalad, “The Innovation Sandbox,” s+b, Autumn 2006: Explores innovation in India’s health-care sector as a model for commercial creativity in all industries and all economies.
  6. World Bank Group’s End Poverty in South Asia blog: A blog devoted to exchanging ideas on ending poverty and dealing with demographic trends and issues in South Asia.
  7. For more thought leadership on this topic, see the s+b website at: www.strategy-business.com/organizations_and_people
 
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