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A New Boogeyman for India's Demographic Dividend...
Mon, 22 Aug Pre-Open

Going by Rancho's definition from the gripping movie '3 Idiots', a machine is anything that reduces human effort. And as time flew, these machines too have evolved with the help of technology and innovation. Today we have robots to handle the monotonous work, internet to get things done within a few minutes, software applications at our fingertips, and various similar automated systems. So no doubt these machines have meant a reduction in human efforts than ever before. But there's a catch here. And it has a lot to do with India. The use of automation and technology is set to pose serious threats to the Indian economy. Allow us to explain.

The prime concern for India in this sphere can be felt on the employment front. The penetration of automation and various technologies has displaced many jobs in India. This has further made the issue of unemployment worse than before. Moreover, the trend is set to grow in the coming future.

We came across an article in the Economic Times that addresses some of the issues on this front. The article states that India will lose around 69,000 jobs until 2021 due to the adoption of the internet-of-things (IoT).

For the unknown, IoT is the term used to describe the addition of sensors and chips to machinery which allows them to be monitored and combined over the internet. It is said that people working in areas such as office administration, support staff, and maintenance will see their roles being taken over by the IoT technology. This is expected as the IoT market in India is set to grow in the years to come. The article states that the market for IoT technology in India is set to rise by 44% by 2021. This is against the 40% recorded at present levels.

Leave it at that. This is just a part of the puzzle. Apart from the above, India is set to witness jobs slowdown with the rise of automation. As the article suggests that there will be hundreds of thousands of jobs that experts say will be lost due to automation. In fact, this trend is already visible. The automation trend is accelerating not just in manufacturing but in services sectors such as IT too.

We've been talking about the megatrend in robotics, automation, and technologies for quite some time. And this megatrend is worrisome for India because about 13 million young Indians enter the work force every year. If they are not productively employed, India could have a big crisis ahead for the so-called demographic dividend.

And the trouble doesn't end here. Poor education system in India coupled with the corruption amplifies this risk. These factors lie behind India's incapability to generate enough decent jobs for a bulging workforce. Vivek Kaul, editor of Vivek Kaul's Diary, has some interesting points to make in this regard. In one of his recent articles, he points out how politicians wanting to set up engineering colleges have spelled a sure sign of trouble for the Indian education system. Further, he has also written on the fallacy of the demographic dividend. And how it has forced us to question this much hyped competitive advantage as compared to other nations.

In a slight different vein, one of our editions of The 5 Minute WrapUp explains how market participants can take advantage of the advances in technology and robotics.

The bottomline for a young nation, however, is that automation remains a threat we cannot afford to ignore. It has the potential to bring many economic concerns for a country that boasts itself of the largest working age population in the world.

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Please Note: The stock price of Yes Bank on NSE-50 is not adjusted for face value split. Kindly refer to its BSE's quote today for the adjusted price.

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