India- China BUSINESS Environment shift

Topics: Demographic economics, Demography, Economics Pages: 3 (773 words) Published: December 5, 2014


Application Exercise (Marks 10)
(Assignment to be submitted)(1500 word) (180 min)

India’s economy would reap a better demographic dividend and would grow faster in the next decade” As compared to China, do you believe India will have a bigger advantage? Elaborate providing reasons for your view. Also, examine how your company is gearing up to benefit from the economic Boom in both the countries?

India and China are the two fastest growing economies in the world. Currently the economic growth rate of China is faster than that of India. However the population growth rate of India is faster than China. India is expected to overtake China before year 2050.The benefit that India has is that along with the population growth rate, the working class proportion is also increasing and by the year 2025 Indian working age population will overtake that of China as demonstrated in the graph below.

According to the Indian Labor Report, 300 million youth would enter the labor force by 2025, and 25 per cent of the world's workers in the next three years would be Indians. The growing population will also result in large consumption and a recent study suggests that this is true even when the per capita income is low. India has managed to regain control on its key macro issues such as current account deficit, fiscal deficit and the currency is by and large under check and a slowdown in China is likely to work well for India economy. 

The dependency ratio in India is also falling and is expected to reach below 50% in the next decade. On the other hand, China’s dependency ratio is expected to increase from 39 % to 45 % over the next decade. A lot of people in China will depend on the depleting working class for their survival; however in India most of the people will be self dependent. This is one of the major factors which will lead to India’s growth and China’s growth will slope downwards after reaching the peak by the end of this decade.

India will be...
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