01 September 2022 – The Indian Express

All about the Demographic Dividend of India

Demographic Dividend Definition:

• According to the United Nations Population Fund, a demographic dividend is “the economic growth potential that can result from shifts in a population’s age structure, especially when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older)” (UNFPA).
• As fewer newborns are born each year, the working-age population of a country rises relative to the young dependent population. A nation has a window of opportunity for economic growth with more people in the work force and fewer kids to support if the proper social and economic investments and policies are enacted in health, education, governance, and the economy.

The demographic dividend for India:

• India has one of the youngest populations on an ageing planet. By 2020, the median age in India will only be 28 compared to 37 in Western Europe, the US, and China, 45 in Japan, and 49 in Western Europe.
• Between the ages of 15 and 64, the working-age population in India has grown more quickly than both the dependent population and the elderly population since 2018. The working-age population will keep growing for another 37 years, or until 2055.
• A decrease in the total fertility rate (TFR), or the average number of births per woman, occurs after the increase in life expectancy stabilises.
• Two surprising facts are revealed by the United Nations Population Fund (UNFPA) study on the demographic dividend in India.
• The demographic dividend potential window for India spans five decades, from 2005–2006 to 2055–2056, making it the longest in the world.
• This demographic dividend window is open at different times due to how the population factors function differently depending on the state.

The Demographic Dividend’s Advantages:

• Economic growth has been enhanced by increased economic activity brought on by a larger number of people who are working and a smaller population that are dependent. It will be channelled through the following channels:
• Increasing employment, which boosts economic output.
• the additional financial freedom provided by the demographic dividend to reallocate resources away from child-related costs and toward physical and social infrastructure expenditures
• a rise in women’s employment, which is a natural result of declining fertility and can represent a new engine of growth.
• an increase in savings rates, as working years are the best times to save.
• the transformation of society into the middle class or the notable emergence of the aspirational class.
• The demographic dividend has historically provided up to 15% of overall growth in industrialised economies.
• Japan was one of the first developed countries to see significant population growth as a result of demographic shifts.
• The country was in a demographic-dividend phase from 1964 to 2004.
• A greater population looking for work would result in rapid urbanisation and industrialization, which would stimulate increased economic activity.
• Increasing the workforce: With a population that is over 65 percent of working age, India will become an economic superpower and supply more than half of Asia’s potential workforce over the coming decades.
• Making successful policy: Population dynamics can be utilised to build and implement plans and programmes more precisely, which is likely to have a positive socioeconomic impact and increase benefits for the general public.

Problems Preventing the Demographic Dividend:

• disparities in demographics The demographic dividend would only be fully realised if India can give its working-age people opportunities for productive employment. Several of India’s poorest states are projected to see the greatest concentration of the rising working-age population.
• lack of expertise The shortage of skills in the Indian workforce is a huge issue because the majority of the new positions that will be created in the future demand a high degree of competence. India might not be able to take advantage of the opportunities due to a low human capital foundation and a lack of skills.
• India has low standards for human development, as seen by its alarming ranking of 130 out of 189 nations on the UNDP’s Human Development Index.
• To develop a skilled and effective Indian workforce, considerable improvements in health and educational standards are necessary.
• The informal economy of India presents another obstacle to the country’s potential to benefit from its demographic transformation.
• As a result of deindustrialization, deglobalization, the fourth industrial revolution, and technological improvement, worries about future growth leading to more unemployment are mounting. In India, the labour force participation rate for persons between the ages of 15 and 59 is roughly 53%, suggesting that roughly 50% of the population is unemployed, according to the NSSO Periodic Labour Force Survey 2017–18.

What needs to be done?

• Building human capital: Promoting economic growth, eliminating extreme poverty, and creating greater inclusion in society all depend on investing in people’s health, education, employment, and skills.
• Developing skills to increase young people’s employability India’s labour force has to be prepared with the skills required for the modern economy. The government established the National Skill Development Corporation (NSDC) with the overriding objective of upskilling/skilling 500 million Indians by 2022.
• Education: Raising educational standards through spending money wisely on elementary, secondary, and postsecondary education. The demographic dividend can only be reaped by India, where more than 41% of the population is under 20 years old, if the country’s educational system is improved. Collaboration between academics and business is also crucial for achieving a balance between academic learning levels and occupational demands.
• The creation of the Higher Education Finance Agency (HEFA) is a step in the right direction.
• Health: An improved healthcare system would enable the young labour population to work for longer periods of time, increasing economic output.
• The National Health Protection Scheme (NHPS) and Ayushman Bharat must be successful. The dietary status of women and children also needs special attention in order for the Integrated Child Development (ICDS) programme to be implemented successfully.
• In order to handle the influx of young people into the workforce, the nation needs annually create ten million new jobs. The promotion of business interests and entrepreneurship would be helpful in finding jobs for the vast labour force.
• India has improved its rating in the World Bank’s Ease of Doing Business Index, which is promising.
• Programs like Start-up India and Make in India will soon achieve their goals if they are carried out well.
• Urbanization: In the coming years, a sizeable section of the young and working population will relocate to cities both inside and outside of their own State, leading to a quick and large rise in the population of cities. The focus of metropolitan policy planning should be on ensuring that these migrant groups can receive essential services like health care and social assistance in urban areas.
• Both AMRUT and the Smart City Mission demand cautious and effective execution.

Way Forward:

• India is on the right side of a demographic transition that presents a golden opportunity for its rapid socio-economic development, if policymakers link the developmental policies with this demographic shift.
• The correct human capital investments are necessary to capitalise on the demographic dividend, with a focus on healthcare, education, and skill development.
• This demographic shift also results in complex issues. If the increased labour force was not properly trained, educated, and given lucrative positions, we would instead be facing a demographic catastrophe.
• We might take advantage of the demographic dividend by studying international strategies from nations like Japan and Korea and devising solutions with the domestic challenges in mind.