Here Come The Millennials

Aryaman Birla is 19 years old. At his age, dad Kumar Mangalam, chairman of the $41-billion Aditya Birla Group, was swotting for his CA exam. And young Aryaman Birla? He’s playing professional cricket for Madhya Pradesh. It would have been unthinkable even a decade ago that the only son of one of India’s largest business houses could pursue a career outside the family inheritance.

Aryaman is a millennial — part of a generation which came of age in the new millennium. Millennials were born in the 1990s and are now in their late teens (like 19-year-old Aryaman) or their twenties.

They matter — in politics, business and society. According to the latest Census data, 19 per cent of Indians are between the age of 15 and 25. That’s roughly 250 million young Indians. How they think, what they buy, and how they vote will determine the direction India takes in the next 20 years. This is a vital period. It represents the start of India’s demographic dividend which is expected to last between 2015 and 2035.

During these two decades, India will have the world’s youngest population. Those of working age (between 20 and 60) will significantly outnumber retirees. The economic consequences can be far-reaching. The higher the ratio between the working age population and pensioners, the lower the demand for social welfare schemes.

Europe and Japan, beset by greying and declining populations, are facing a demographic disaster. As average longevity rises to nearly 90 years, pensioners in, for example, Germany and Italy (both with negative population growth) could spend over 30 years in pensioned retirement — almost as long as their working years.

The financial burden on these countries’ social welfare will rise steeply over the next decade, leading to higher taxes and resentment among those of working age who will have to pay not only those extra taxes but face unemployment or under-employment as government spending on industry, services, health, education and infrastructure gets squeezed by spiralling public welfare costs for the elderly.

Britain and the US are protected from this vicious cycle by virtue of immigration. Both countries have rising populations. Since immigrants are usually young, the British and American median population age is lower than it is in continental Europe.

Paradoxically, the influx of migrants from the war-torn Middle East might help Europe. While terrorism is a concern, young Arab migrants (Germany with a population of 79 million has absorbed over one million migrants fleeing Syria in the past year) will — with education and assimilation — eventually lend fresh blood to European workforces. The vibrancy of America’s melting pot culture has helped it escape Europe’s ageing atrophy — a lesson the rest of the West must learn.

For India, the millennials can be both a boon and bane. The 10 million young people graduating every year into the workforce need jobs. If the economy does not throw up enough jobs to absorb these new millennials, many will feel disenchanted and even disenfranchised. Social tensions can rise. Though confined to small (often motivated) sections of students, universities like JNU could become breeding grounds for elements hostile to India’s economic development.

In Prime Minister Narendra Modi’s first two years in office, much time has been occupied in resetting India’s position in the world and coming to grips with the leaden-footed bureaucracy. Modi inherited a scorched earth economy. The GDP growth had slumped to 4.5 per cent in 2013-14. Institutions had been subverted. Crony capitalism had led to large financial scams.

Two years later, much has improved. But the pace of improvement is slow and in many cases the direction of reform is wrong. The finance ministry is the principal culprit. The income-tax department’s fresh notice to Cairn assessing a penalty of over Rs 20,000 crore on its disputed retrospective tax liability goes further than pettiness. It smacks of vindictiveness.

Other ministries such as power under Piyush Goyal, railways under Suresh Prabhu, transport (Nitin Gadkari) and defence (Manohar Parrikar) are doing well. But the finance ministry is far too vital to remain a laggard. The stock market, while not always an accurate barometer of the direction of economic policy, has given its verdict: the Sensex hovers at the same level as when Modi took office in May 2014. If the Prime Minister does not read the writing on the wall now, it may be too late.

The low prices of crude oil and gas have given the government a windfall. Without that, neither the fiscal deficit nor the current account deficit would be in control at 3.5 per cent (2016-17) and 1.2 per cent, respectively. Crude prices, however, are beginning to rise as oil producing countries cut output.
Unless annual GDP growth can be shovelled up to 8 per cent, creating jobs for our surging millennials will be difficult. It was heartening though to hear Bikek Debroy, a member of Niti Aayog, say recently that 7.5-8 per cent GDP growth is indeed possible in 2016-17.
Jobs are vital to achieve sustainable development. Transport minister Nitin Gadkari recognises that. He said recently: “One crore jobs will be created under the Sagarmala project only in the shipping and ports sector.”

With a good monsoon expected this year, agricultural growth should rise (on a low base) to over 4 per cent. If services growth stays steady at 9-10 per cent and the recent industrial uptick takes manufacturing growth to around 6 per cent, overall GDP growth (with services contributing 60 per cent to the GDP pie) could come close to Debroy’s estimate of 8 per cent.

India is at an historical moment in its development. If our economy grows consistently at 8 per cent a year for the next 20 years, it will more than double to $5.5 trillion in nominal terms ($15 trillion by purchasing power parity) in 2035.

With good governance, direct distribution of welfare benefits to the poor, rising middle-class consumption and the ascendence of a new startup entrepreneurial ecosystem, India’s millennials will finally fulfill India’s tryst with destiny.