4th YI Voice .pdf

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Yi Voice 1

January March 2005 Volume 2 Issue 1

Yi

InsideNational Chairman / Vice Chairmans Message

Yi Activities

National level

Action accross Chapters

Ten takes from Harish Lakshman

McKinsey Quarterly Report

Forthcoming Activities

About Us

2nd Young Indians Summit 2005Transforming India - Making It Happen


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Yi Voice 2

I am really glad to inform you

that Yi has entered its third and

most important year. We have

spent a large part of the last

two years in ensuring that weset the right kind of foundation

for Yi, which will enable

tremendous growth in the

coming years. From hereon it

is time for action and implementation.

In consultation with all the Chapters, we have

developed the Work Plan for the year 2005-06,

which covers our five core Focus areas of Education,

Youth Affairs, Health, Environment and Economy.

For each of these areas we are putting a concertedeffort to make a beginning and achieve a good

progress during the current year. It is critical that

we stick to our Work Plan and focus all our energies

on implementation.

At the national level, we will shortly be rolling out

the Yi Akshara initiative across the country. We

request the support of all Yi members to make this

noble initiative a huge success. We have started a

new initiative at the national level titled External

Affairs and Public Policy. This will focus on creating

relationship with similar organizations in countries

across the globe as well as interact meaningfully

with young Indians in spheres of influence such as

politicians and policy administrators. Arjun Wallia,

one of the oldest members of Yi is chairing this

important initiative and already made considerable

progress towards structuring relationship with similar

organization in Germany.

I am sure that with the kind of dedicated team that

we have, we will not only achieve what we set out

to do for Yi, but more. I request all your support

and participation in Making it Happen

G V Sanjay ReddyNational Chairman - Yi

Making it Happen...Yi set the stage for

Transforming India by

definitely Transforming

Bangalore on the 25th and 26th

of February 2005 with the 2nd

Annual Yi Summit. Around

800 young Indians

congregated together from

many walks of life. There were

intense interactions on a variety of topics with a

galaxy of speakers. Extensive networking took place

between Young Indians from across the country.

Overall, the Summit was highly successful and as

promised ended with a Work Plan for Yi for the

year 2005-06, which was presented in the

Valedictory Session on the 2nd day.

This Work Plan will shortly be presented to all Yi

members by their respective Chapter Chairs along

with the Chapter Work Plan for 2005-06.

We have also requested KPMG to undertake a study

of the current organization structure, systems and

processes and make their recommendations on

changes that are required in order to enablesuccessful implementation of the national and

chapter work plans. KPMG have already

commissioned this exercise and will be completing

the same by end of June 2005.

The 1st quarter of 2005 also saw lot of actions

across various Chapters, details of which are given

in the succeeding pages.

In summary, we are looking forward to very exciting

and activity-filled months ahead. I sign off until thenext issue of Yi Voice with the confidence that

although we have set ourselves stiff targets in the

Work Plan, WE CAN, WE WILL.

Narayan SethuramonNational Vice Chairman, Yi


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national level

Our activities

Yi held its second Annual Summit at

NIMHANS convention Centre,

Bangalore on the 25-26 February

2005. The theme of this years

Summit was Transforming India

Making it Happen. More then 750

delegates participated in the two-day

Summit.

The 2005 Yi Summit brought

together youth and leaders frommany institutions including business,

government, local communities,

NGOs, schools, colleges etc. to

discuss and debate the issues and

their resolutions that concern the

youth of our nation and how they

can participate in Building Developed

India.

The Summit began with the Inaugural

Session having B J Panda and Sachin

Pilot, Indias two youngparliamentarians via videoconference

from Delhi. B J Panda, said, India

is on an economic and political

transition mode. There is a

need for more Young Indians

to engage themselves

actively in the political

mainstream and Education,

Infrastructure & Structural

Reforms will be the key to

this transformation. India is

slated to be the third largest

economy in the world and asa result, the countrys growth

rate needs to touch double

digits.

Sachin Pilot spoke on the collective

dream of a new India and urged Young

Indians to promote India, shed their

colonial mindset and transform the

country through their commitment and

initiatives.

Sunil Kant Munjal, President, CII said,

India must evolve an originaleconomic and development policy to

stand tall in the global scenario. India

must strive to achieve the highest

standard of education and health fo

its people. Its core competence can be

enhanced through technical strength

and human endeavour. He also urged

the youth to come forward and make

a difference through their time

understand and attitude. He also

inaugurated the e-Yi website the

knowledge portal for Young Indians.

Speaking on behalf of Balu Doraiswamy

President, HP India, Pallab Talukdar

2nd Young Indians Summit 2005

CII President Sunil Kant Munjal addressing Inaugural Session

All Young Indians taking pledge for Yi


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national levelDirector, Enterprise Marketing,

Alliance, HP India said, India can be

transformed through technology and

innovation. Citing various examples

that have changed the face of modern

India, he said that India was a

fountainhead of ideas, but discipline willcarry these dreams to implementation.

He concluded by saying, If you are

the best in India you are the best in

the world.

Delivering his inspirational keynote

address at the Yi Summit, Tarun Das,

Chief mentor, CII said, Energy,

Enthusiasm and Excitement - the 3

Es, must characterize every Young

Indian. To be able to make India the

skilled capital of the world, we need

to act, achieve and arise. He

concluded by emphasizing on ThinkTarget, Think Organisation and Think

Plan a three point success formula

for Young Indians.

G V Sanjay Reddy said, Yi is resolute

about building a strong foundation

for the country by realizing the immense

amounts of potential that lies waiting

in the younger generation.

The Young Indians at the Summit, held

hands and in unison pledged:

Yi will work towards value-basedleadership.

Yi will work for community

Yi will work for India

Yi will enjoy their mission andwork with passion

Yi will TRANSFORM INDIA.

The introductory session

Showcasing Yi began with a

ceremonial rendition of the National

Anthem, and then covered the

genesis of Yi, its objectives, a recap

of Yi Summit 2004, its take-awaysin addition to a roundup of Yi

activities, initiatives and progress

made during the year.

This was followed by a macro

Session: Educating our Future which

discussed divergent views on the role

of education in crafting a brighter

future for India. Issues such as literacy

primary and vocational education

expanding the reach and enhancing the

content for quality education in ou

society, were the other issues

discussed.

Session on Tackling Unemployment

brought forth pressing issues facing

Indias employment scenario, given its

burgeoning young workforce, and the

skills shortage projected in key sectors

The session also developed an agenda

for a more inclusive employment

growth, through entrepreneurship

education and training.

Technology with Innovation depicted

the role of technology and innovation

in facilitating sustainable development

and improving basic quality of life, fo

Indias masses. Speakers shared some

pioneering initiatives and experiences

and also focused on grass-roots

innovations.

The session Towards Bette

Infrastructure: Taking Ownership

focussed on key infrastructure related

bottlenecks that our economy faces

today. Government as well as Industry

Dr Dipankar Gupta making theme presentation on Educatio

Panel discussions on Unemployment

Panel of Technology Session

Tarun Das addressing


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suggestion for the way forward was

made. The focus of the session was on

civic and transport infrastructure.

The 2nd Day started with the session

Leadership: Taking Charge discussing

various facets of leadership required

for effective nation building.

Session on Media: Shaping minds for

a better India explored ideas and ways

from media to proactively play a role

in positively shaping youth minds and

channelising their energies and

supporting initiatives.

Session on Environment: We can make

a Difference provided an

environmental outlook for 2020, by

sharing experiences of successful

initiatives.

Speaking at the Valedictory session

Narayan Sethuramon in his welcome

remarks mentioned, Yi is a vibrant

force and an effective tool for social

change. The spirit of Yi looks beyond

the present and seeks to

collectively influence the

country. This was

followed by a

presentation of the Yi

action plan by Pradip

Kanakia, Executive

Director, KPMG, who

felt the session during 2-

day summit were

enthralling, educating

and entertaining. He

mentioned that the

Action Plan focused on

education, economy, environment,

healthcare & Youth affairs [EEEH&Y].

Critical steps have been taken to

achieve success with a focus on

internal and external issues.

ParsuRaman R, Deputy Chairman, CII-

Southern Region remarked

this audience is surely going

to grow as it has the

required dynamism & energy

with sound outstanding

Nasser Munjee addressing Infrastructure Session

Tarun Tejpal at Media Session

Dr. Shailaja D. Sharma sharing her views on Environment

ability to take this movement forward.

Y. C. Deveshwar, Vice President, CII

mentioned, when we embark upon

Transforming India, it is important to

have clearly stated values & vision and

a stable leadership which needs to

be strong enough to mobilize resources

To keep leadership stable, one needs

to create distributed leadership both

geographically & focused areas that run

through the entire organisation

There was a Special Address by Tim

Timken, Chairman, The Timken

Company & Krishna Pillai, Country

President, Alstom India, where Mr

Timken emphasized critica

areas of focus for growth

Important to focus on few

things and move them

forward; Belief in

independence is the keyRetaining independence

Innovation & Technology

and approach on ethics is

to understand what is right

and how to do it right. Mr

Krishna Pillai believed that

Yi has You need to dare to live the

dream - cease the day do it now

G V Sanjay Reddy in his closing remarks

mentioned that at the end of it all,

he felt inspired, energized, enthusedand with an Action Plan for the year

ahead We will make a big difference

The summit ended with everyone

singing the National Anthem.

Dr Krishna Pillai addressing Valedictory session


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action across chapters

BangaloreCareer Alternatives 2005, a jointinitiative by CII and Christ College

was held from 3 5 February 2005

at Christ college. The event was

aimed at showcasing excellence in

education sector and bringing together

stakeholders in the field of education.

The event comprised of an exposition, a

conference and a workshop.

The Keynote address at the

conference was delivered by Mr S

Gopalakrishnan, Convenor, Industry

Institute Interaction Panel, CII

Karnataka & Chief Operating Officer,

Co-Founder & Member of the Board,

Infosys Technologies Ltd.

The sessions focused on various

sectors like IT / ITES, Bio-Technology,

Telecom, Healthcare, Retail, Legal,

Manufacturing, Media, Fashion and

Architecture.

Prof G Rangarajan, Chairman Division

of Mathematics, Indian Institute ofScience, Dr A Malathi, Director of

Administration, Manipal Hospital, Ms

Sudha Raju, Vice President, NIIT Ltd,

Mr Sunil Kunte, Country Manager,

Fidelity Information Systems Company,

Mr Kush Medhora, COO, Pantaloon

were among the speakers who

addressed the conference.

The exhibition provided a platform for

students, parents and professionals to

access the best national andinternational opportunities in education

and employment.

Over 6000 students from various

colleges across Bangalore attended

the event over the three days.

Chennai

Young Indians Chennai Chapter

The Young Indians Chennai Chapter

organized an Interactive Session with

Mr M M Murugappan, Director-Technology & HR, Murugappa Group

on 8 January 2005. Mr Murugappan

made a presentation on Family

Enterprises and the Role of Non-

Family Professionals in Family

Business. He spoke at length on the

types of family businesses, life cycle

forces impacting on family businesses

and the kind of dilemas members of

the family find themselves in. Some of

the strategies for managing the family

and business were also discussed. Mr

Murugappan also spoke on the role of

non-family professionals in the

governance of family businesses from

the Murugappa Group experience.

The Sankara Senior Secondary School

students of std 8, Yi net had visited

Paramamkenikuppam on Saturday the

29th of January 2005.

Paramamkenikuppam is a Tsunami

affected area. The people are

temporarily living under tents.

Houses are under construction. Thesettlements are about 200m away

from the sea. The school consists

of 228 children from Std 1 to 9.

The people in this area are mostly in

need of shelter, boats and other long

term needs. The school children

were in need of uniforms, slippers

and other school requirements. They

decided to help them buy materials

for their school uniforms. In this

regard the school collected Rs 15

000/ - by conducting a Carnival on

28th February 2005 within the schoo

premise.

Yi Net at Womens Christian College in

association with CII organised a talent

contest for young women titled - Y

Am Proud to be A Women on 1st of

February 2005 at Womens Christian

College, Chennai. Ms Kiran Rao of

Amethyst, Ms Sudha Ramalingam

Advocate and Ms Visa Ravindran werethe jury members. This event

showcased the talent from severa

colleges in Chennai to celebrate the

pride they felt about being women. This

was a competition where participating

colleges have to creatively portray

through the medium of their choice why

they are proud to be women. A poste

contest was also held on the same day

The theme highlighted issues that

Panel of Career Alternatives 2005

Exhibition held at Career Alternatives 2005

M M Muruguppan addressing Yi


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Yi Voice 7

concern young women across the

nations as they prepare themselves to

be the future leaders of our country.

Hyderabad

29 January: Yi Learning / Interactive

Meeting with Mr. Madhu Goud,

Member of Parliament.

24 March: Yi Learning Activity - Visit

to Pragati Printing Press.

Yi members visited Pragati Printing

Press to know the process of printing,

various equipments used and technology

applied in the printing industry. Yi

members found it quite interesting by

the organised structure, which Pragati

operates

15 Yi members participated in the visit.

Kochi

Five of Yi Net students from MEC,

Kochi have got jobs in Wipro. Totally 6

students from MEC got in and 5 were

our Net students who had attended the

Yi Summit. Yi had given them a

certificate and letter that described the

Summit, the speakers etc.

The students also spoke about their

experiences with Yi Net and the work

that they had been doing and all 5 got

selected. Mala says that the students

are absolutely thrilled and grateful to

Yi for opening this door for them. Since

MEC is a government college, this is a

highly unexpected break for them.

Congratulations for the successful

students who had put in so much

sincere work into the Net, working

with slum children and so many other

projects. We wish them success in their

careers and hope that they will become

Yi members in the future.

Congratulations for Yi Kochi, specially

the Bridge team who have really worked

tirelessly to support the students and

help them achieve their targets, in the

Yi nets and in their careers.

Members Meeting of YI Kochi Chapter

12th March, 2005: Hotel Avenue

Centre, Kochi

A Members Meeting of the Young

Indians (YI) Kochi Chapter was

organized on 12th March 2005, at

Hotel Avenue Centre.

The meeting began with the Chapter

Chairman, Mr. Umang Patodia,

welcoming the members present. The

Chairman briefed the members on the

Yi Summit which was organized on 25-

26th February 2005 at Bangalore. The

summit was extremely successful

initiative and was attended by more

than 800 Young Indians from around

the country. Kochi too was strongly

represented, with a contingent of 20

members and 17 Yi Net students

Other members who had attended the

summit shared their thoughts on the

event. Members felt that a positive

energy had evolved during the summit

which showcased the vibrancy of the

new generation. The variety of

speakers covering different sectors

inspired the members and the Net

students equally. Members felt that the

Summit was a great motivation factor

The members also congratulated the

Yi Net students of Kochi, for being one

of the most vibrant among the Net

gathering at the Summit.

The Chapter Chairman briefed the

members on the New organization

structure of Yi which was evolved

during the 3rd Yi Governing Counci

Meeting, held on 6th January 2005

at Bangalore.

Mr. Umang also briefed members on

the Yi initiative in Education

Akshara. Akshara is a project that

aims at setting up of resource centres

through out the country.

The E Yi initiative was also discussed

in length. Mr. Rajesh Venugopal was

requested to check the web page and

mail the Yi members on the featuresof the e-group.

Yi Bridge meeting at Vidhyodaya

School, Thevakkal 16th February 2005

Members of the Yi Kochi Chapte

visited the Vidhyodaya School

Thevakkal on 16th February 2005

The school has a very active Net

membership of more than 25

students. The objective of this visit was

to brief the Net members on Yi summit2005 and also to select members who

would attend the Summit at Bangalore

The Net members of this school had

also prepared a poster, which would

be displayed at the Summit. 4 student

members and a facilitator were

selected to participate in the Yi summit

at Bangalore. The Yi members were

also accompanied by Arun George

Mathew and Cherian of the YI Net atYi Bridge workshop at Vidhyaodaya School

Chennai Yi net students at Paramamkenikuppam


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Yi Voice 8

Model Engineering College. These

students shared their experience of

working for the YI Net at their College.

They also explained how the Yi net in

MEC has expanded from a group of 8

to almost 60 students in MEC. A

presentation on the Mahila Vibhag

Anganvadi Computer Literacy Project,

initiated by these students was also

made. The meeting was headed by Mrs.

Mala Patodia (Yi Bridge Co-chair). 30

students of the Vidhyodaya school

were present for the meeting.

Kolkata

Radio Mirchi

As part of the internal learning activity,

the Kolkata Chapter organized a

learning event with Radio Mirchi on the

12 February 2005

The main objective

Radio Mirchi, Kolkata from

Entertainment Network India Limited,

A Times of India Group Company, is

part of Indias largest Private Radio

Network with a national footprint that

covers Mumbai, Delhi, Kolkata,

Chennai, and Pune, Ahmedabad and

Indore.

Everyday, Radio Mirchi in Kolkata

reaches out to about 24 lakh listenerswho are hooked onto its unique mix of

talk and music. It is no wonder, that,

in addition to listeners, marketers and

media planners consider Radio Mirchi

to be synonymous with the category.

Its shows like Hello Kolkata and

Bumper to Bumper are a must for any

Kolkatan today.

In Kolkata, Mirchi is not only known

for its on-air content but also its path-

breaking events - a unique Mirchi

Tram, live updates from the book fair,

unplugged concerts aboard a barge

on the river Hooghly, etc. Radio

Mirchi Kolkata is probably the only

FM station which has always kept

its listeners happy, having given away

prizes worth lakhs in day through its

on-air contests! Games,

entertainment and music all tinged

with spice that probably is the

hallmark of Radio Mirchi Kolkata!

In short, Radio Mirchi in Kolkata has

ensured that the hitherto ignored

medium of Radio is now looked upon

as one with the hippest attitude and

verve & one which is the first choice

for an advertiser looking out to reach

the youth and the working males.

As they say, Mirchi sunnewale,always khush

Mumbai

Epitome Summit: 31 January 2005

As a part of the R A Podar Colleges

inter collegiate festival named

Cynosure, the Yi Podar Net students

also organised the Epitome Summit

which was held on 31 January 2005

at the Principal L N Welinkar

Auditorium, Matunga.

The theme of the Summit was India

unveiled and, the focus was to

undiscover Indian talent and also discuss

the current and future management

issues.

In line with Yis objective of involving

young Indians in shaping India, CIIs

Young Indians (Mumbai Chapter) tied

up as the knowledge partner for the

Summit. Yi played an important role intying up speakers who could provide

an insight into the corporate world and

provide information that will be

beneficial to them in their course of

life.

At the beginning the Yi net students

made a presentation on Yi and their

experience with Yi to the audience.

Post this, Ms Bhairavi Jani, Yi Mumbai

Chapter Chair gave the welcoming

remarks, Mr Tushar Jani, Chairman

Blue Dart Express Ltd gave the

inaugural address.

The Mumbai Chapter Yi members

formed the panel of speakers.

Mr Ashish Bhasin, Director, Lintas

spoke on the Role of Advertising &

Marketing,

Ms Devita Saraf, Zenith made apresentation on the Made in India

Brand,

Ms Sweta Mangal, Marketing Manager

Tata AIG spoke on the Scope of the

Indian Insurance sector,

Mr Anshuman Singh, CEO, Welspun

spoke on the Retail sector and Mr Rav

Krishnan,Director, ZIQITZA Healthcare

spoke on the, Role of youth in todays

society.

The Summit went off very well and

was well attended by students from

about 19 colleges in Mumbai. The

Summit has helped Yi Mumbai reach

out to students of several other colleges

in Mumbai who may be interested in

forming Yi nets. The Summit received

excellent feedback from the students

on the content and quality of

interaction.

Yi Kolkata members at Radio Mirchi Studio

Students attending Epitome summit


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Yi Voice 9

Meeting with Shri Milind Deora: 8

February 2005

A delegation of Yi Mumbai members

comprises of Bhairavi Jani, Kamaljit

Rastogi, Ashish Bhasin along with the

CII Secretariat met up Shri Deora

(Member of Parliament) at his office

to seek his guidance, support and

participation in other activities of YoungIndians.

At the meeting, Ms Bhairavi Jani

briefed Shri Deora about the various

activities conducted by Yi Nationally

and at the Chapter level.

Shri Deora outlined a program where

Yi can play a role along with three

Colleges in Mumbai and a few

companies in implementing a mentoring

program for the youth at thesecolleges. Six Yi members have

volunteered i.e. two members per

college and these members would liaise

with the college students to form core

students groups, which would then

interact with the companies.

Meeting with Rahul Bose: 15 February

2005

Bhairavi Jani, Shaffi Mather along with

the CII secretariat met Rahul Bose at

the CII office. Rahul Bose is anadvertising copywriter, a radio

performer, an actor, a scriptwriter and

a creative director. Apart from his

career in the films, Rahul is also very

actively involved in the work of the

Spastics Society and a social

organization called Akshara on behalf

of which he is fighting for gender

equality and communal harmony.

Currently, Rahul Bose is silently doing

his bit in Andaman and has also been

active in helping CII in the tsunami relief

operations.

Rahul also participated in the session

on Leadership: Taking Charge at the

2nd Yi Summit in Bangalore.

The purpose of the meeting was to

seek his point of view, guidance,

support and participation in activities of

Young Indians.

Pune

A chapter meeting of the Yi Pune

Chapter was held on 14 Dec and it

was decided that the Pune Chapter

would start work on 3 intiatives. Sub

committees were formed and meetings

were held for each initiative. Work has

started on the following 3 initiatives in

the last quarter:

Tsunami Initiative

Yi Pune members supported the Rotary

Club of Pune Riverside in the

rehabilitation of Puddupetai village,

close to Cuddalore to provide boats,

nets etc to help with the livelihood of

the affected villagers. They contributed

Rs. 3,01,000/- towards this purpose

and have also committed support to

visit the village and sustain thelivelihood development initiative.

Employability Initiative

One of the major concerns for our

country is the creation of employment

and entrepreneurship. At the same time

it is critical that the employable youth

are trained with the necessary skill sets

to be able to succeed in securing jobs

when they are made available. If we

are to achieve high economic growthit is critical that a high caliber work

force with multiple skill sets is made

available to industry. Dr. Reddys Labs

under a specific program has

formulated a wonderful process of

ensuring the same. YI Pune is working

with them by using their model to

create worthy employable candidates

from economically weaker sections of

our society.

Initiative for sustainable development

of street children

There are an estimated 100 million

street children in India comprising of

abandoned children and those who have

run away from home, tribal families

settling on city streets, children from

slums etc. The idea is to make a world

of a difference to their lives. YI Pune

is working towards making a

permanent change in shaping the lives

of street children in the city of Pune

beginning with the street children

at one major road intersection in

the city.

Interaction with David Panna

Yi Pune Chapter invited Mr. David

Panna, a senior resource at Ernst &Young, Mumbai to interact with the

members on Valuation. The meeting

was held on 11th March at Hotel Ta

Blue Diamond and the session was

highly interactive with a large numbe

of case studies and live examples being

discussed as a part of the exercise.

A meeting was held on 21 Jan 2005

to study various projects that the Pune

Chapter could undertake under the Y

Connect program. Mr. Abhijit Pawa

made an interesting presentation on the

6 sigma approach of selecting projects

that would align with the objectives

and goals of Yi and the Connect

program in particular. An interesting

session where a lot of ideas

emerged.

Yi Pune Chapter meeting

David Panna interacting with Yi Members


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Yi Voice 10

I decided to take up my current position because I want to grow my family

business to be a global player

One word to describe you Sincere

Greatest Achievement Being a part of the change that is sweeping the Indian

auto components industry

Failures I learnt from Not understanding customer requirements is always

disastrous

I admire Mahatma Gandhi

In my spare time I swim and listen to music

Youth to me The future for a better world

My mantra for Life Hard work never fails

My vision for India Economic superpower

Message for the youth Make India proud

10 takesHarish is the eldest son of the Rs. 1,000 crore

Rane Group head L. Lakshman. A BITS Pilani

graduate, Harish studied management at

Purdue University, US, and when he returnedto India in 1998, he already had two years of

hands-on experience at TRW. Now, as

designated director, he works at the head office

of Rane TRW Steering Systems Ltd. on TTK

Road, Alwarpet.

Harishs contributions to the company have

been considerable. The turnover of Rane TRW

has grown from Rs 60 crore to Rs 300 crore in

five years.


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Yi Voice 11Yi Voice 11

T

he worlds population is aging,

and as it gets even grayer,

bank balances will stop

growing and living standards, which

have improved steadily since the

industrial revolution, could stagnate.

The reason is that the populations of

Japan, the United States, and

Western Europe, where the vast

majority of the worlds wealth is

created and held, are aging rapidly.

During the next two decades, the

median age in Italy will rise to 51,

from 42, and in Japan to 50, from

43. Since people save less after theyretire and younger generations in their

prime earning years are less frugal

than their elders were, savings rates

are set to fall dramatically.

In just 20 years, household financial

wealth in the worlds major

economies will be roughly $31 trillion,

less than it would have been if

historical trends had persisted,

according to new research by the

McKinsey Global Institute. If left

unchecked, the slowdown in global-

savings rates will reduce the amount

of capital available for investment and

impede economic growth.

Growing older, saving less

In just two decades, the proportion of

people aged 80 and above will be more

than 2.5 times higher than it is today,

because women are having fewer

children and people are living longer.

As the elderly come to make up alarger share of the population, the

total amount of savings available for

investment and wealth accumulation

will dwindle. The prime earning years

for the average worker are roughly

from age 30 to 50; thereafter, the

savings rate falls. With the onset of

retirement, households save even less

and, in some cases, begin to spend

accumulated assets. Thus an increase

in the share of elderly households

The demographic deficit: How

aging will reduce global wealth

will have less impact on the countrys

financial wealth.

In some countries, the relatively lowersavings rates of younger generations

in their peak earning years will

exacerbate the slowdown in savings

and wealth.

Global ripple effects

This slowdown in household savings

will have major implications for all

countries. In recent years the United

States has absorbed more than half

of the worlds capital flows while

running a current-account deficitapproaching 6 percent of GDP. Japan

has historically enjoyed a huge

current-account surplus, which has

allowed it to be a major exporter of

capital to other countries, notably the

United States. The expected drop in

Japans household savings will make

this arrangement increasingly

untenable.

No easy solutions

Finding solutions wont be easy.Raising the retirement age, easing

restrictions on immigration, or

encouraging families to have more

children will have little impact.

Boosting economic growth alone is

not a solution, nor is the next

productivity revolution or

technological breakthrough. To fill the

coming gap in global savings and

financial wealth, households and

governments will need to increase

their savings rates and to earn higherreturns on the assets they already

have. These changes involve hard

choices but can offer a brighter future.

Analysis shows that an aggressive

effort to increase immigration wont

solve the problem, simply because

new arrivals represent only a tiny

proportion of any countrys population.

Navigating the demographic transition

The only meaningful way to

counteract the impendingdemographic pressure on globa

financial wealth is for governments

and households to increase thei

savings rates and for economics to

allocate capital more efficiently

thereby boosting returns.

Increasing savings rates

In many countries, todays younge

generations earn more and save less

than their elders do. This discrepancy

is an important driver of the wealthshortfall in the United States and

more surprisingly, in Japan. If

younger generations saved as much

as their parents did while continuing

to earn higher incomes, one-quarte

of Japans wealth shortfall and nearly

a third of the US gap would be closed

by 2024.

Persuading young people to save more

is difficult, however, and tax incentives

aimed at increasing household

savings have yielded mixed results

Of course, governments can also

increase the savings rates of thei

countries through the one mechanism

directly under their controlreducing

fiscal budget deficits. Maintaining

fiscal discipline now is vital if

governments are to cope with the

escalating pension and health care

costs that aging populations wil

accrue.

The take-away

If no action is taken, the coming

slowdown in global savings and the

decline in projected financial wealth

could depress investment and slow

economic growth. A concerted effort

to boost savings rates, shrink

government deficits, and increase

returns on financial assets can help

avert this outcome.

Source: McKinsey Quarterly


12/12

Yi V i 12

Yi Voice is a quarterly feature.

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