Opinion | India’s demographic dividend will play out over a longer span

Opinion | India’s demographic dividend will play out over a longer span

News:

Study conducted by United Nations Population Fund (UNFPA) on demographic dividend in India.

Important Facts:

About Demographic Dividend:

  • Demographic dividend refers to the growth in an economy that is the resultant effect of a change in the age structure of a country’s population. The change in age structure is typically brought on by a decline in fertility and mortality rates.
  • And it is said to be occurring when the ratio of the working age population is high and the dependency ratio in terms of proportion of children and elderly people low. This advantage can create the space needed to increase investments in enhancing human capabilities, which, in turn, can have a positive influence on growth and development.
The first dividend occurs during the demographic transition process, when the working-age population increases as a share of the total population, and the percentage of both young and old dependents decreases.
The second demographic dividend results from an increase in adult longevity, which causes individuals to save more in preparation for old age. This increase in savings can thus contribute to capital accumulation and economic growth.

 

Major Findings of the study:

  • Report says availability of demographic dividend in India, started in 2005-06 and will last till 2055-56 based on the following facts:
  • Close to 30% of India’s population is in the age group 0-14 years. The elderly in the 60-plus age group are still a small proportion (8%) of the country’s population. The working age group 15-59 years’ accounts for 62.5% of India’s population. The working-age population will reach the highest proportion of approximately 65% in 2036.
  • Reports also highlight that demographic dividend is not available in all the states at the same time because different states have behaved differently in the past and are projected to behave differently in terms of population parameters in future also.

Pattern in India:

  • Fertility decline in south earlier than other states and this has created regional variations in the degrees and timings of fertility decline.
  • When all the states in India are mapped in terms of fertility levels, north is predominantly youthful and a maturing south and west.
  • The key finding of the study is that states will have their demographic dividend opportunity at different times because of the staggered nature of demographic transition.

Significance of staggered nature of Indian demographic transition.

  • India will enjoy a longer span of demographic dividend because, as the window closes in some states, it will open in other states and it can guide the socio-economic development policy planning according to the age and sex structures in states or a set of states.

There are four main areas where a country can find demographic dividends:

  • Savings: During the demographic period, personal savings grow and can be used to stimulate the economy.
  • Labor supply: More workers are added to the labor force, including more women.
  • Human capital: With fewer births, parents are able to allocate more resources per child, leading to better educational and health outcomes.
  • Economic growth: GDP per capita is increased due to a decrease in the dependency ratio.

Way Forward:

  • UNFPA advocates a differential approach in forward-looking policymaking and programme planning to harness the demographic dividend opportunity in those states where the windows for opportunity is closing soon.
  • The focus in the states where the demographic dividend window is yet to open will have to be threefold such as addressing harmful practices such as child marriage, access to quality sexual and reproductive health services and family planning services to all, and provisioning of health, education, life and vocational skills to all the young people.
  • Fine-tuning the planning and implementation of schemes and programmes by factoring in population dynamics is likely to yield greater socio-economic impact and larger benefits for people.
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