[Answered]What is Demographic dividend? Argue whether Indian demographic dividend is turning into a demographic disaster or not?

Demand of the question

Introduction. Contextual introduction.

Body. Discuss opportunity of demographic dividend for India. Various issues that can turn it into a disaster.

Conclusion. Way forward.

According to United Nations Population Fund (UNFPA), demographic dividend means, the economic growth potential that can result from shifts in a population’s age structure. It occurs mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (<14 but >65 years). India has one of the youngest populations in an aging world. By 2020, the median age in India will be just 28. This bulge in the working-age population is going to last till 2055, or 37 years from its beginning.

Issues if not focused would turn Demographic Dividend into disaster:

  1. Poor human capital: Poor human capital formation is reflected in low employability among India’s graduates and postgraduates. According to ASSOCHAM, only 7 % of MBA graduates have employable skills in India, and only around 20-30 % of engineers find a job suited to their skills. India may not be able to take advantage of the opportunities, due to a low human capital base and lack of skills.
  2. Low human development: India ranks 130 out of 189 countries in UNDP’s Human Development Index, which is alarming. Life expectancy at birth in India (68 years) is much lower than other developing countries. The mean years of schooling and expected years of schooling are still low at 6.3 years and 11.7 years respectively.
  3. Informal economy: Informal nature of economy in India is another hurdle in reaping the benefits of demographic transition in India. Nearly 216 million people are engaged in agriculture sector are in the informal economy where not only they earn lower wages, but with little social security and few days of employment in a year.
  4. Jobless growth: There is a mounting concern that future growth could turn out to be jobless due to deindustrialization, de-globalization, the fourth industrial revolution and technological progress. As per the NSSO Periodic Labour Force Survey 2017-18, India’s labour force participation rate for the age-group 15-59 years is around 53%, that is, around half of the working age population is jobless.
  5. Asymmetric demography: The growth in the working-age ratio is likely to be concentrated in some of India’s poorest states and the demographic dividend will be fully realised only if India is able to create gainful employment opportunities for this working-age population.
  6. Declining female labour force participation: According to data from the International Labour Organization and World Bank, India’s female labour force participation rates have fallen from 34.8 % in 1990 to 27 % in 2013. Without women participation India can’t dream of reaping demographic dividend.

Way forward:

  1. Building human capital: India has to invest more in human capital formation at all levels, from primary education to higher education, cutting-edge research and development as well as on vocational training to increase the skill sets of its growing working-age population.
  2. Skill development: Skill development to increase employability of young population. India’s labour force needs to be empowered with the right skills for the modern economy. Government has established the National Skill Development Corporation (NSDC) with the overall target of skilling/ up skilling 500 million people in India by 2022.
  3. Education: Enhancing educational levels by properly investing in primary, secondary and higher education. India needs to increase its spending on health and education. As recommended by the National Health Policy 2017 and the National Policy on Education 1986, India needs to increase its spending on health and education to at least 2.5 % in 6 % of GDP respectively from its current levels.
  4. Health: Improvement in healthcare infrastructure would ensure higher number of productive days for young labour force, thus increasing the productivity of the economy.
  5. Job Creation: The nation needs to create ten million jobs per year to absorb the addition of young people into the workforce. The number of formal jobs have to be created, especially in labour intensive, export-oriented sectors such as textiles, leather and footwear, gems and jewellery etc. These sectors also have a higher share of the female workforce.
  6. International learnings: By learning from global approaches from countries such as Japan and Korea and designing solutions considering the domestic complexities, we would be able to reap the benefits of demographic dividend.

India is on the right side of the demographic transition that provides golden opportunity for its rapid socio-economic development, if policymakers align the developmental policies with this demographic shift. This demographic transition also brings complex challenges with it. If the increased workforce is not sufficiently skilled, educated and provided gainful employment, we would be facing demographic disaster instead

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