India is on track to significantly expand its share of global consumption, with projections indicating a rise to 16% at purchasing power parity (PPP) by 2050, up from 4% in 1997 and 9% in 2023, according to a new McKinsey Global Institute report, Dependency and Depopulation: Confronting the Consequences of New Demographic Reality.

The report highlights that only North America will exceed India’s consumption share, forecasted at 17% by mid-century. This surge reflects India’s burgeoning middle class, younger demographics, and increasing income levels, underscoring a fundamental shift in global consumption trends.

Emerging regions, including India, Latin America, Sub-Saharan Africa, and West Asia, are expected to drive over half of global consumption by 2050, fueled by population growth and rising incomes. Conversely, advanced regions such as North America, Greater China, Western Europe, and Central and Eastern Europe will see their share contract to 30%, a sharp drop from 60% in 1997.

This demographic shift is poised to reshape the global labour market. By 2050, two-thirds of all hours worked globally will come from regions like India, emphasising the redistribution of population and labour dynamics. Businesses worldwide must adapt to evolving consumer demands in these rapidly growing economies.

India, which currently comprises 23% of the world’s population, will see its share decline to 17% by 2050 and 15% by 2100. Despite the proportional decrease, the population will continue to grow, reaching 1.5 billion by 2050, marking a 5% increase from 2023. However, the country’s fertility rate, which fell below the replacement level in 2019, signals an ageing population.

Economically, India’s demographic dividend, which contributed 0.7% annually to GDP per capita growth between 1997 and 2023, is expected to dwindle to 0.2% by 2050 as the working-age population contracts. The report also notes a decline in labour intensity, with hours worked falling at an annual rate of 1.1%, dampening the benefits of workforce expansion.

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