Page 55 - Nuvama | IC Report 2023

INDIA: THE 5D ADVANTAGE

A case in point is Brazil, which failed to capitalise on its favourable demographic dividend. Institutions
of governance, timely and suitable reforms, and public investment in infrastructure (ports, roads,
airports, metros and public education, among others) that crowd in the private sector are some
equally important factors in ensuring success. Arguably, East Asian countries performed much better
on these fronts than their Latin American counterparts.

30 75 Exhibit 9:
No improvement in investment rate Brazil could not
despite favourable demography capitalise on
50
50
REPUBLICA FEDERATIVA DO BRASIL 50 70 its favourable
demography
25
50
65
(% of GDP) 20 60 (%)

50
50
15 55
REALS DEUS SEJALOUVADO

10 50
1970 1980 1990 2000 2010 2020

Brazil investment rate (% of GDP) Brazil working age population share (RHS)
Source: UN, World Bank, Nuvama Research

Where do opportunities lie?

In a nutshell, India is at a stage where its workforce is young and expanding and shall stay so for
one–two decades. In this sense, India is uniquely placed as large parts of the world are confronting Low
ageing populations. indebtedness,
sustained
Even so, favourable demography is just one leg on which the India Advantage stands. Low indebtedness, reforms and good
sustained steps towards efficiency-enhancing reforms and a political consensus on good governance governance along
combined with a favourable demography make India’s opportunity truly historic. In our view, they with favourable
largely lie in: demography make
India’s opportunity
• urbanisation, as people migrate to cities, thereby improving overall productivity; historic
• premiumisation of consumption, as aspiring youth along with higher incomes pave the way for
an upgrade in living standards; and
• an equity savings cult, which has just begun and should probably get a further fillip.
We discuss these trends at length in the Opportunities section.

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