Healthcare in India – The Demographic Advantage

Chitra Ramakrishnan

The Indian healthcare industry is primarily being driven by the demographic advantage, specially the age structure.

In 2020 the average Indian will only be 29 years old. A population bulge in the working age groups that India is experiencing currently is perceived as an advantage, as it leads to the demographic dividend of lesser dependency ratio. India has already begun to enjoy the advantage of age based dependency ratio according to projections. This ratio is projected to fall to 48 by 2025 and will rise to 50 only by 2050, as the population bulge moves forward. This is the window of opportunity. It works out better in health care terms because of the size of our population. A falling dependency ratio and a sizeable aging population translates to more paying power and increasing demand for healthcare for at least the next 40 years till the age composition starts changing and the window closes.

Apart from this, as the working age population moves along the age continuum, work-related life style diseases and increased healthcare awareness will create a huge demand for healthcare services. A rising aged population which overwhelms its working population chokes the market and dries up funds. Something along the lines of the capacity to service debt, as far as market sentiment is concerned. This crucial difference between the emerging markets and developed markets is one of the major drivers of growth and the reason for heavy private, foreign and government investment in the healthcare sector.

Source: Healthcare Outlook”, Technopak Quarterly Report, Feb ’07, Vol 1

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