Half of India’s youth prioritise religion over science, and believe women should always listen to their husbands

India Apr17Mention India to many CEOs and investors, and they will smile broadly at the thought of its “demographic dividend”.

Two-thirds of India’s population are under-35,and are already swelling the numbers of those in the critical Wealth Creator 25 – 54 age group which drives economic growth. As the chart shows:

   India’s median age is just 27 years today.  It will still be only 31 years by 2030
   The Wealth Creator cohort is already 523m, and will reach 652m by 2030, whilst the Under-25 cohort is over 600m
   There are only 169m in the New Old 55+ generation.  Although life expectancy in India is now 69 years, it was just 37 years as recently as 1950

Helpfully, a major new survey by India’s Centre for the Study of Developing Societies provides new evidence on the hopes and values of this vast younger generation. It aims:

At understanding the social and psychological wellbeing of young people….because if the expectations of this growing mass of youth are not addressed on time, then the disappointments of this burgeoning population could translate into social unrest and even violence.”

Its key findings are critically important:

   One-third of young people are classed as students, up from just 13% during the last survey in 2007.  But many are apparently “studying further to delay entry into the workforce or perhaps as a means of ‘timepass’
   There is also a clear caste divide in terms of access to education, with “42% of Upper Caste youth reporting themselves as students, compared to 25% of Dalit youth and just 16% of Adivasi.
   “Agriculture is the largest employer of India’s youth” – and 39% of these young people are lowly-paid hired workers
   Unsurprisingly, given this background, nearly 1 in 5 young people are worried about jobs and employment, whilst 1 in 10 worry about inequality and corruption

India’s youth also tend to be conservative – 53% oppose dating before marriage, 45% oppose inter-religious marriages and 36% oppose inter-caste marriages.  And the survey adds:

We also ascertained the youth’s opinion on contentious issues which have been at the centre stage of the ongoing debate over liberty and progressive beliefs – banning of movies which hurt religious sentiments, beef consumption and death penalty. We find that 60% supported banning movies which hurt religious sentiments. 46% object to allowing beef consumption and 49% support retaining capital punishment. These figures clearly indicate that most youngsters remain averse to progressive beliefs on political issues.

As the Financial Times notes in its comments on the survey:

“Religion retains a powerful grip. Nearly half give religion precedence over science when they clash, while just a third would privilege science over religion….more than half of youths believe women should always listen to their husbands. Nearly two-fifths feel it is inappropriate for a woman to work after marriage, while a significant 38% feel women should not wear jeans.” 

Similarly, 40% of young Indian women “favoured the idea of an obedient wife

The survey evidence confirms a critical paradox about India:

   Most young Indians have smartphones and are style-conscious
   Yet like most poor people, they are very conservative in their social attitudes, with patriarchy deeply-rooted

It is very easy for non-Indians – seeing television news or making an overnight visit en route to/from China – to simply see the smartphones and fashion, and assume India has now become a middle class society by Western standards. Of course, it does have relatively rich people.  But fundamentally, as Indians all know, it remains a very poor country with average earnings just INR 272/day ($4.20) – and less than two-thirds of adults are literate.

There are vast opportunities in India, once one accepts these key facts. These are often focused on helping people to build a better life for themselves – one example, as premier Modi has highlighted, is in providing toilets for the 600m who currently lack access to them.

Hindustan Unilever has understood this basic truth for many years, and has become India’s largest consumer products company as a result. Their mission statement is simple and powerful – “doing well by doing good“.

 

Half of all Asians still living below $2/day poverty line

IncomesThe good news is that the world’s development agencies are waking up to the idea that income level is going to be key to future world growth.  They are also starting to recognise that the vast majority of people in the emerging economies are not ”middle-class” with near-Western standards of living.

Thus a major new Study from the Asian Development Bank (ADB) titled ‘Support for Inclusive Growth’ highlights:

“ADB’s inclusive growth framework has three pillars: promoting high, sustained economic growth (pillar 1), broadening inclusiveness through greater access to opportunities (pillar 2), and strengthening social protection (pillar 3). The study finds that ADB’s priorities have been largely skewed toward pillar 1, leaving limited support for pillars 2 and 3. As the study stresses, growth alone cannot adequately promote social inclusion. Policies and interventions to broaden access to opportunities and build strong social safety nets are also vital for achieving greater inclusion.”

The bad news is that the ADB’s earlier focus on pillar 1 has created enormous confusion amongst policymakers and companies.  It led to a belief that wealth effects caused by rising property values could somehow provide a sustainable basis for growth.

The blog has argued against this view for a long time – as in this letter to the Financial Times, 2 years ago:

“Such wishful thinking represents a significant barrier to the growth of China’s domestic consumption. It has led to a major diversion of precious resources, as companies rush to provide western-style goods for a market that doesn’t exist. Far too few understand that affordability, rather than luxury, is the key criteria for success.”

It is therefore delighted to see the ADB’s new approach, which removes the rose-tinted glasses and instead highlights:

  • Half of all Asians live below the $2/day official poverty line today
  • There are 1.62bn in this position, versus 2bn in the 1990s
  • A quarter of all Asians live below the extreme poverty line of $1.25/day

This shift in thinking is directly aligned with the blog’s own argument that age range and income level are key to future corporate profits.  But it also highlights the problems caused by the previous approach:

  • Data on income levels has been available for many years, as shown by the chart above.  It shows that average per capita consumption in N America at $60/day is 15x the average in S Asia, and 4x that in East Asia/Oceania (which, of course, includes many very high-income countries such as Japan, S Korea, Australia etc)
  • It will now take time for everyone to reorient themselves to the new approach.  The blog has lost count of the number of times it has heard the phrase ”the rising number of middle class” being used to justify investments across Asia in recent years.  Now, companies will find out too late it was all a mirage, when the money has been spent
  • Even more worrying is that time is the one commodity not available.  The debt mountains that have been built to support consumption based on ‘wealth effects’ are an earthquake waiting to happen.  We are already feeling the first tremors, and they are very uncomfortable
  • Growth levels will therefore almost certainly fall sharply in the next few years, as it becomes clear that this debt can never be repaid.  This will hit profits and government finances, making it more difficult to afford the longer-term investments needed to achieve sustainable growth in the future

As a new global analysis by the Financial Times confirms, the income gains of the past 20 years may not be maintained:

Almost 3bn people in the developing world are surviving on between $2 and $10 per day, putting them above the poverty line but often still struggling for the financial security that is a middle class hallmark.”

Companies who understand this dynamic, and who have maintained sensible levels of debt, will be the big winners, as we will discuss in tomorrow’s free webinar.  Those who have done the opposite now need to change course rapidly, if they want to prosper in the future.