Can Indians get rich before getting old?

Right now, more than half of India’s population is under 30. Which means that for every older dependent in India today, there are roughly two working-age Indians. Economists call this the demographic dividend: the growth boost a country gets when the majority of its people are of working age. More earners means more savings, more investment, and more production. But the dividend is not automatic — it must be earned.

The share of working-age Indians in the total population will peak sometime around 2040 and then begin to fall. After that, fewer workers will support more dependents — elderly parents, grandparents, and a shrinking share of children. When that happens, growth gets harder. Household savings decline. Healthcare costs rise. And governments start struggling to meet pension and welfare bills as a smaller tax base tries to pay them. What this means is that India has roughly twenty years to grow fast enough so that when we age, we are wealthy enough to afford it. 

Consider South Korea. In 1960, it was a small, war-devastated country with a per capita income comparable to India’s and no natural resources to fall back on. Over the next three decades, it opened its economy to trade and built globally competitive manufacturing. By the time its population began to age in the 1990s, South Korea had crossed into high-income status. It got rich before it got old.

China followed a similar arc. After the reforms of 1978, the country grew at extraordinary speed. And today an average Chinese person already earns five times what the average Indian earns. So China was also able to capitalise on its demographic dividend. 

India’s position is more uncertain. We are growing, but our per capita income is still around $2,800. At our current pace, doubling that takes roughly a decade. Meanwhile, India adds roughly a million new workers to the labour force every single month. Our demographic dividend will only pay out if those people are productively employed. A young population that cannot find work is a ticking time bomb.

This risk has a name: getting old before getting rich. Countries like Brazil (per capita income around $9,000) and Thailand (around $7,500) are stuck at middle incomes — their populations aged before their economies grew enough to sustain them. If we cannot grow rapidly enough, we risk the same fate.

The encouraging part is that the window is still open. What determines whether we get through it is the set of conditions that drive growth — investment, trade, competition, and institutions. How did other countries get rich, and what can India learn from them?