Is the millennial population really responsible for the slowdown of the automobile industry?

India’s Finance Minister Nirmala Sitharaman recently made a statement that took social media by storm. She said that one of the reasons why the automobile industry was failing was because millennials preferred using Ola and Uber services to purchasing vehicles. Adding further, the Finance Minister said, millennials do not want to take EMIs.

Before one can start digging deeper into the issue, who are these millennials? And why are they so hell bent upon bringing the automobile industry to ruins? Is there truth to Ms. Sitharaman’s statement, or are the netizens winning this popularity contest? Or is the statement a major distraction from what is happening to the economy at the moment?

For starters, a millennial is a person who has attained their ‘young adulthood’ phase in the current century. So, at the moment, millennials would range from anybody who’s going to college right now, or is in search of jobs to ‘settle down,’ or has one of these superb things called a ‘profession’, or is eagerly waiting since anywhere between 3-7 years for their ‘scheduled’ exams to happen.

Let’s try to understand the age-structure of this new social group called ‘millennials.’ According to Pew Research Centre, which is a Washington D.C. based fact-tank, anyone born between 1981 and 1996, i.e. is aged anywhere between 23 to 38, in the U.S. is considered a millennial. Anyone born after that are popularly called ‘post-millennials.’

From this definition by a U.S. based fact tank, two important questions will arise :
1. This is by a U.S. based fact tank. Why should we apply it to India?
2. Why should we believe these numbers?

The answer is simple. And the article that provides for this age bifurcation also provides for the reason behind it. The article goes on to say that generational cut-off points aren’t exact. However, they aren’t arbitrary either. While taking into account who counts as a millennial it is important to note their social and economic standing in life. The reason why we identify population into such classes is for the sake of analysis. If you are a product of the CBSE evaluation system, you may even recall our NCERTs talking about the dependent and independent population division that the census uses.

For the sake of our argument, let’s extend the age bracket from 23 to 38, to 20 to 40. The Single Year Age Data available on the Census of India website can be downloaded here. This data has been chosen, as it does not have any pre-divided classes. And we shall start the data analysis from scratch. Besides, if you’re a millennial, chances are you’d want to check out some cool data for yourself too!

A simple addition of the population between the age of 20 to 40 yields the result : 415,102,814. This number translates to roughly 34.4% of India’s population. (A simple DIY :  Add cells F29 through F49. This is Millienial population. Then add F9 through F109 for total population. Multiply the Millennial Population result by 100 and then use the Quotient function to find out the percentage.)

Since we already had the rural and urban population distribution numbers in the same sheet, we decided to understand the rural urban distribution of this ‘millennial’ population. Out of the 34.4% of the total millennials, roughly 22.7% belong to rural areas, while 11.7% belong to urban ones. This is a very interesting insight, as this goes on to show how overall, nearly one-third of the population is being held responsible for the slowdown of the automobile sector, out of which again, two-thirds belong to the rural areas and one-third belong to the urban ones.

The next step to analyse the damage done by millennials to automobile industry is to understand how deeply have companies like Ola and Uber penetrated the rural and urban landscape. Since we couldn’t find the exact data on the number of cities that Ola operates in, we decided to elaborate upon our findings about Uber.

Currently operating in 40 cities, according to this page on its website, only 2 of the places out of the 40 it serves, have a greater rural population than the urban one; both of them being in Rajasthan.

Out of the 40 cities Uber serves, only 2 are in rural-population dominated areas. The remaining are in major Urban Agglomerates, or million plus cities.

This brings out an even weirder picture. The 11.7% of the urban millennials are possibly causing more damage to their country’s automobile sector than their 22.7% rural counterparts. Shame on you, urbanites!

But wait, this is only Uber. Ola boasts of having a presence in over 160 cities. If that is true, then a safe assumption would be that Ola definitely has a better rural presence than Uber. Even if one were to roughly take a 1:3 ratio of the rural:urban presence, the 11.7% class of millennials is MUCH more to blame for causing the economic slowdown.

Trying to understand this data from the point of view of a millennial, it is safe to bet that people who want to buy automobiles should have the capacity to pay for them. Maintaining a vehicle is no easy task either. Apart from maintenance, after the implementation of Motor Vehicle Act, one must also have the capacity to pay for the fines they shall be liable to pay in case of mistakes they make.

Keeping these factors in mind, it is safe to say that it is only the people with jobs that can afford to buy vehicles. With data missing on income, unemployment and skill, it is really tough to take this analysis forward. However, some key developments over the past years need to be understood to be able to fully gulp what the FM said.

  • It has barely been months since the Ministry of Labour and Employment confirmed that unemployment is at a 45 year high of 6%. Even though many people have been condemning the leaked PLFS report saying that it would be wrong to compare this year’s data with all the previous years because of a different matrix, the socio-economic inequalities are clear as day. Unemployment is definitely on the rise, and its proof can be seen by the recent data which points out that there were more than 3.5 lakh job losses in the automobile industry alone.
  • The recent State of India’s Environment report by Centre for Science and Environment has gone on to show that the youth, who are aged between 20 to 24 years, make up around 40% of India’s labour force. And unemployment among this age group is as high has 32%. The sadder part is that the rates are higher when it comes to the more educated lot. People who have at least a degree are facing an unemployment rate as high as 13%. Critics have had a bold say in making statements around the fact that this has to be seen as positive, as these figures translate into more Indian youth pursuing higher education. However, in doing so, they are going against the very definition of ‘unemployment rate.’
    Unemployment rate is the percentage of unemployed workers in the total labour force. Workers are considered unemployed if they currently do not work, despite the fact that they are able and willing to do so. People pursuing higher studies fall out of this bracket, because even though they may be able, they are not willing to work. They are simply making a choice to pursue their studies.
    Further, the argument that unemployment is high because people are choosing to be entrepreneurs is bogus, because the number of entrepreneur firms and start ups has not shown significant changes.
  • The story of unemployed youth is a lot darker than it seems on the surface. The fact that they aren’t able to get jobs is not only a reflection on the severe skill deficit, but also on the quality of education provided in India. The absence of even a single university from India on the UK-based Times Higher Education ranking’s top 300 goes on to prove the same. The dismal number of universities present in the list show that India’s education sector is not clearly growing with the pace that its population needs it to. Sub-standard education reduces opportunities for youth to have a shot at employment.
  • Another shot at employment is considerably reduced when examinations do not happen on time. Millions of Indians look forward to having a chance at government jobs because of the organized nature of the work and security of tenure. However, cases from across the country point out that college and government exams are often delayed years after years, leaving a frustrated ‘millennial’ behind.

Among these grim situations, the fact that millennials are still being able to contribute to the economy in a positive way is still a wonder. With a majority of them not having the budget to purchase vehicles, its probably time to look into the ‘mathematics’ of the situation, even though it didn’t help Einstein discover gravity (it worked wonders for Newton, though!)

The automobile industry is the key to India’s manufacturing sector, which has always been the provider for millions of jobs, especially to young millennials who are ready and willing to work. It is in these times, that it is more important than ever for them not to be blamed for the slump in the sector, but to skill these millennial forces and involve them in the plan for future development. India as a country rests upon constructive foundations. And there should be no doubt regarding the fact that without a healthy, skilled and educated youth, no country can succeed.

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