Strategy: He has both aptitude and attitude issues - Kotak

He has both aptitude and attitude issues. We see certain innate challenges to India's demographics story given 'issues' with both skillsets and mindsets of India's youth. We note that public discussions have largely focused on low education levels and skills of India's young population but a bigger issue may be the mindset of the Indian youth (particularly, male). India's long-term consumption story could get affected without corrective actions.

Young demographics offers comfort for long-term consumption-traditional narrative

India has the highest youth population (15-34 years) estimated at 458 mn in 2015 surpassing China's and is expected to reach the peak in 2030 at 490 mn. Working age population as a share of total population, currently at 66%, will remain high until 2050. The promise of a stable and large working age population is one of the key factors supporting rich valuations of most consumer-centric businesses.

Growing demand for jobs is a challenge

India has historically created 7mn job opportunities every year between1994-2005. According to various NSSO rounds, only 10 mn jobs were created between 2005 and 2012. The trend is unlikely to change in the coming five years. National Skill Development Council (NSDC) envisages the creation of 6.5 mn of annual jobs between 2017E and 2022E. With 23-25 mn people joining the workforce every year, there is a vast gap between demand and supply of jobs.

Poor learning outcomes and inadequate skill levels of youth are bigger issues

The low skill levels of prospective job-seekers will pose another challenge in creating high-paying jobs that can drive consumption. The education level of 73% of the youth entering the workforce in FY2017 is estimated to be at 'elementary' levels. Also, the quality of learning is low and has been falling rapidly in government schools, which pose a huge problem in the form of employability of this young population later on. As such, 80% of the skill development market is still at the basic level.

'Conservative' outlook of a large section of youth may compound matters

Young Indian males are still largely in a patriarchal mindset as revealed by a recent survey of CSDS-KAS. The survey was conducted among 6,000 youth in the 15-34 age group across 19 states. Exhibit 10 gives details of the survey. We do not endorse or dispute the findings of the survey. We use the data to merely highlight the challenges to India's consumption story from (1) the low participation of women in the workforce potentially and (2) the mismatch between the aspirations of the youth with respect to their preferred jobs and availability of jobs. Among key points that may affect India's consumption story, (1) 40% of the males do not want their wives to work post marriage, which found resonance in 33% of the females and (2) 65% of the youth prefers the security of a government job over setting up their own businesses (19%) or taking up a job in the private sector (7%).

Source : Equity Bulls

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