As per a new report from the McKinsey Global Institute, titled "Dependency and Depopulation: Confronting the Consequences of New Demographic Reality", India is set to become a major player in global consumption, projecting to account for 16% of the world's consumption at purchasing power parity (PPP) by 2050. This marks a significant rise from 4% in 1997 and 9% in 2023, placing India in a commanding position within the global economy. The projection indicates that India's consumption will continue to grow rapidly, only trailing North America, which is expected to hold a 17% share of global consumption.

The increasing share of India in global consumption is primarily driven by its young population, growing incomes, and the evolving demographic trends. As one of the largest emerging economies, India is poised to play a key role in the global shift toward emerging markets, where regions like Latin America, Caribbean, and Sub-Saharan Africa will collectively contribute to more than half of global consumption in the next 25 years. This surge in consumption underscores India's rising economic clout as it continues its growth trajectory.

The report highlights a significant demographic shift, where regions with historically higher fertility rates are now experiencing aging populations. By 2050, it is projected that only 26% of the global population will reside in the first-wave regions (including North America and Europe), a sharp decline from 42% in 1997. The remaining population will largely be in later-wave regions, including India, which will see a surge in its working-age population. In line with this, India’s labour force is expected to contribute an astounding two-thirds of global working hours by 2050, cementing its importance in the global economy.

The changing age demographics also bring challenges, with the support ratio—the number of working-age people relative to the elderly—projected to decrease by half by 2050. This mirrors the situation in countries like Japan, which has already faced the economic challenges of an ageing population. Despite this, India's demographic dividend has been a key driver of GDP per capita growth, contributing an average of 0.7% annually since 1997. This trend is expected to continue, although there will be pressures on the country's social welfare systems as the population ages.

A particularly promising aspect for India's economic future lies in its female workforce participation. As more women enter the workforce, India's GDP per capita could see an additional 4-5% growth, which is a substantial potential for further economic development. The increased participation of women in the economy could not only boost India's productivity but also contribute to a more inclusive growth model, ensuring that a larger segment of the population benefits from India's economic rise.

In conclusion, India’s future consumption power and its role as a global economic leader will be pivotal in shaping the 21st century. The country's young and expanding workforce, combined with its demographic shifts and economic reforms, offers vast potential for future growth. As India moves closer to 2050, its trajectory will have profound effects on global trade, consumption patterns, and economic stability.

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