India's population is close to 1.4 billion.Earlier, we blogged about India's population problem.No, it's not what you think.
India does not have a population surge problem as we have been repeatedly told.Instead, India's issue is that it's population will peak rather than expected ...
and then decline.
To put it simply, India might age before it grows rich.Here's an excerpt from recently's piece ...
The data states India's 'replacement rate' has fallen below the level required to preserve the population.The replacement is the rate at which the population can replace itself from one generation to another.The fertility rate is the variety of children a female is most likely to have.
The fertility rate of 2.1 is called as the 'replacement rate'.
In 2021, India's total fertility rate fell to 2.0.
All this implies that India's population will peak much sooner than anybody expected, by 2060, at about 1.6 billion.India's population is close to 1.4 billion today.
The information has made it clear that for the next 4 years, population growth will be slow.
In reality, the rate will keep falling up until it reaches absolutely no around the year 2060.
Then population growth rate will turn negative.You can read the post here.Fast Growth NeededThe need of the hour is effective financial reforms that brings quick growth and wealth developing chances to individuals of the country.
India has a narrow window of opportunity of about 30-40 years to change itself into a developed nation.Otherwise, India will be stuck in what economic experts call the 'middle-income trap'.
In this state, a country's population peaks and diminishes well before it prospers.
Brazil is a fine example of a nation stuck in the 'middle-income trap'.
We must demand the best from our political leaders and magnate if India is to overcome this trap and make the transition to a developed nation.But what can we make with our own money?Can we take actions to guarantee a rich life for ourselves and our families despite a less beneficial demographic circumstance in India?Yes, we can.In this editorial, we take a look at the sectors that will take advantage of the altering population trends.
We will also highlight some sectors to avoid.First, the huge winners ...
Real EstateDevelopers in India remain in a predicament in the long term.A nation in which population growth is rapidly decreasing may not be the very best location to grow.But this is only half the story.India will get older and wealthier at an ever increasing rate.
People will demand premium, comfy living areas.
Not to point out 2nd homes/vacation homes.One requires to only seek to China's huge real estate boom regardless of it's quickly declining population growth to understand the potential in India.Thus, property business that pivot from low-income real estate to premium real estate will do very well.Another specific niche segment that will do well is senior housing.India will surpass China as the most populous nation in a few years.
With each passing year, our big population will age.
At some point in their lives, lots of people will think about living in a comfy place after retirement.Enter senior housing.
Business focused on this specific niche have an enormous tailwind going for them which will last several decades.Richa Agarwal, our smallcap master, has recommended the stock of a company, which operates in this extremely rewarding specific niche, to customers of her smallcap suggestion service Surprise Treasure.High-End Customer RetailA big population which is not as young as it used to be, will choose to invest more on products that are 's ophisticated' as opposed to 's tylish'.
Trends are all the rage among India's youth today.
That won't be the case 15 years from now.
Premium products that cater to particular requirements of discerning clients will be popular then.Consumer brand names - fashion, electronic devices, accessories - that recognise this shift will slowly but certainly establish a base of faithful premium consumers.
These companies will control the retail sector over the next 2-3 years in India.On the other hand, brands that continue to focus on the youth and/or low-income section ten years from now, will have a hard time to grow their revenues.
They will face increasing competitors in a stagnant market.Travel - & TourismThis will be a big growth industry in India's future.Covid-19 will seem like a remote memory when an older and richer population begins investing huge cash on luxury vacations.This is something that may look like an alien idea for lots of investors today.
After all, we think just rich people go on luxury vacations.It's difficult for common Indians to imagine a middle-class household going on a high-end cruise.
But there is absolutely nothing uncommon about this.
It happens all the time in the established world.One only requires to look at the spending patterns of individuals in richer countries to see how this will play out in India.Of particular interest to investors need to be business that are going above and beyond to deliver personalised experiences for travellers.Plain vanilla tourist will soon be a thing of the past in India.
That day will come sooner than you think.TechnologyThis one is obvious however very important.Today, the tech sector in India is controlled by IT services firms.
Think Infosys, TCS, and the like.But India's tech sector 15 years from now will look a lot different.The big IT services firms will likely still be around.
They will face big competition from a growing number of more recent companies.These business are just start-ups today.
As you read this, promoters of these start-ups might be fretting about getting financiers to back their vision.But a few of them will make it past the initial development stage.
And a few of them will inevitably become world leaders in their niche.Far sighted investors in these stocks will become really wealthy indeed.HealthcareThe younger the population, the healthier it is on average.
This is assuming obviously the babies are taken care of.But as a nation gets older, the healthcare needs of its population increases.
The older we become, the more we depend on the pharma market.
This is unfortunate but true.Just take a look at the gigantic size of the healthcare sector in the developed world.
That will tell you all you need to learn about the wealth creation capacity of these companies.Covid-19 may have brought these companies into the spotlight however they have a very intense long-term future too.
It's just a matter of discovering the ideal stock and holding on to it.Now let's examine a couple of sectors that are not as promising as one may believe ...
EducationEdTech is a rage today but this will not be the case in the future.It's just a matter of a couple of years before the varieties of children filling up India's schools will peak and then decline.That does not mean these companies won't earn money, but they will be dealing with a headwind to their growth.
And only the best will survive.The industry itself will likely not provide superlative profits after this decade.FMCGThis might appear odd but it's a natural result of a slowing population.Sales of FMCG companies are closely associated to the population of a nation.
This is because FMCG firms sell staples, i.e.
food and basic consumer items.With population development decreasing, their revenues will be significantly driven by higher-priced items.But there is a limit to how much they can raise rates.
This headwind will play its role in avoiding FMCG firms from ending up being a high-growth market in the future.ConclusionSo these were a few of the sectors that are likely to do well beyond this years ...
and some that might not do so well.If you are a long-term financier thinking about creating a retirement portfolio, we highly recommend you think about India's demographics.Population trends will give you a great concept about investment concepts you might wager your retirement on.Disclaimer: This post is for information purposes just.
It is not a stock suggestion and need to not be dealt with as such.
(This article is syndicated from Equitymaster.com)(This story has not been edited by TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)