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Can India Seize the Demographic Advantage?

  • Category
    Economy
  • Published
    17th Nov, 2022

Context

There is a need to strategically implement economic and industrial policies to seize the advantage of its burgeoning young workforce.

About

What is India’s Demographic Dividend?

  • According to the United Nations Population Fund (UNFPA),a demographic dividend means the economic growth potential that can result from shifts in a population’s age structure.
  • Median Age: The median age in India is 28 years, compared to 38 in China and the US, 43 in Western Europe, and 48 in Japan.
  • Diversity in India’s States: While India is a young country, the status and pace of population aging vary among States.
    • Southern States, which are advanced in demographic transition, already have a higher percentage of older people.
    • The differences in age structure reflect differences in the economic development and health of the states.

Important statistics:

  • India’s working-age population has numerically outstripped its non-working-age population.
  • India’s total fertility rate (TFR) has declined from 2.2 in 2015-16 to 2.0 in 2019-21 (NFHS-5).
  • India will account for 20 per cent of the worldwide increase in the working-age population over the two decades from 2020.

Why there is an urgency for job creation?

  • A rapidly growing number of young people.
  • India’s economy and labour-force are undergoing a structural transformation.
  • A significant shift away from agriculture has occurred in job seeking population.
  • Rise in migration to seek non-agricultural jobs in towns and cities
  • The student population, which is about a quarter of the country’s population is waiting to enter the labour market.

How can India take Advantage of the Demographic Dividend?

  • Increase in Fiscal Space: Fiscal resources can be diverted from spending on children to investing in modern physical and human infrastructure that will increase the economic sustainability of India.
  • Rise in Workforce: With more than 65% of the working-age population, India can rise as an economic superpower, supplying more than half of Asia’s potential workforce over the coming decades.
    • An increase in the Labour Force enhances the productivity of the economy.

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.

Challenges

  • Low Human Development Parameters: India ranked 131stposition by the United Nations Development Programme (UNDP) Human Development Index 2020, which is alarming
  • Demographic structures are quite different among states.
  • Dismal health sector
  • Pan-India Growth strategies do not work
  • Informal nature of the economy
  • Jobless Growth
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