India risks ‘squandering’ demographic dividend: World Bank

The World Bank's South Asia regional update, "Jobs for Resilience," highlights concerns regarding the region's utilization of its demographic dividend, particularly focusing on India's employment growth.

1: Dimension- Observations on Employment Trends

• Slow Job Creation: The South Asia region, including India, is not effectively leveraging its demographic dividend, as job creation lags behind the growth in the working-age population.
• Unemployment Rate: India, in particular, has witnessed employment growth significantly below the average growth in its working-age population from 2000 to 2023, leading to a decline in the employment ratio.
  • The youth unemployment rate was 45.4 per cent in 2023, according to the Centre for Monitoring Indian Economy, a think-tank.
• Female employment ratios in many south Asian countries, including India, are among the lowest in the world, at less than 40 per cent.

2: Dimension- Untapped benefits from the demographic dividend

• Economic growth:Better economic growth is brought about by increased economic activities due to a higher working-age population and lower dependent population thereby increasing labor force along with rising in women workforce.
• Policy Framing: Effective policy making by strictly implementing schemes and programs for the benefit of the people.
• Rise in employment: A higher employment-seeking population will lead to the rapid increase of industrialization and urbanization.
• Increased workforce:The working-age population rising to 65% will increase the workforce.
• Swelling labour force:India’s labour force is swelling as its baby boomers reach working age. It would boost India’s growth. 
• Effective diversion of resources: India’s population has the potential to divert resources from spending on irrelevant things to investing in physical and human infrastructure. 
• Rise in women’s workforce:There is a rise in women’s workforce activity that naturally accompanies a decline in fertility. 
• Easy accumulation: The fourth is that working ages also happen to be the prime years for savings, which is key to the accumulation of capital and technological innovation. 

3: Dimension- Economic Growth and Employment

• Despite challenges in employment, India's economy is expected to exhibit robust growth of 7.5% in FY23/24, contributing to the overall strong performance of the South Asian region.
• However, the region could achieve even higher output growth if the employment rate matched that of other Emerging Market and Developing Economies (EMDEs).

4: Dimension- Approach to seize Demographic Advantage:

• Upgrading Education Standards: Irrespective of rural or urban settings, the public school system must incorporate skilling, training, and vocational education in line with market demand.
• Fulfilling Health-Related Requirements: Increasing government spending on health, education, and other social sectors will be crucial to realizing the potential dividend from India’s young demography.
• Inter-Sectoral Collaborations:Moving forward towards safeguarding the futures of adolescents, it is imperative to put in place mechanisms for better inter-sectoral collaboration.
• Bridging Gender Gaps in Workforce: New skills and opportunities for women and girls befitting their participation in a 3 trillion-dollar economy are urgently needed. This can be done by:
  • Legally compulsory gender budgeting to analyze gender-disaggregated data and its impact on policies
  • Increasing childcare benefits
  • Boosting tax incentives for part-time work
• Federal Approach for Diverse States: Inter-ministerial coordination for strategic planning, investment, monitoring, and course correction should be an important feature of this governance arrangement.