{"id":23944,"date":"2024-04-19T18:49:05","date_gmt":"2024-04-19T13:19:05","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=23944"},"modified":"2024-04-20T10:35:14","modified_gmt":"2024-04-20T05:05:14","slug":"indias-demographic-dividend","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/19-04-2024\/indias-demographic-dividend","title":{"rendered":"India\u2019s Demographic Dividend"},"content":{"rendered":"\n<p><strong>Syllabus: GS2\/Social Issues; GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-0cb2d8d8970fcc76e5fb15bd21ee6252\" style=\"color:#015aa7\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Recently, the International Monetary Fund (IMF) has suggested that India needs to focus on investing heavily in education and health to ensure that its growing, young population is adequately employed.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-3d911df83488551a72a0406ea50fac11\" style=\"color:#015aa7\"><strong>Understanding the Demographic Dividend<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It refers to the <strong>economic growth potential<\/strong> that <strong>results from shifts in a population\u2019s age structure<\/strong>, mainly when the share of the <strong>working-age population (15 to 64 years old)<\/strong> is larger than the <strong>non-working-age population (14 or younger and 65 or older)<\/strong>.\n<ul class=\"wp-block-list\">\n<li>The change in age structure is typically brought on by a decline in fertility and mortality rates.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-5fd0934f2e027745fe6ed3b091e8ae34\" style=\"color:#015aa7\"><strong>Key areas where a country can find demographic dividends<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Savings <\/strong>\u2014 During the demographic period, personal savings grow and can be used to stimulate the economy.<\/li>\n\n\n\n<li><strong>Labour Supply <\/strong>\u2014 More workers are added to the labour force, including more women.<\/li>\n\n\n\n<li><strong>Human Capital<\/strong> \u2014 With fewer births, parents are able to allocate more resources per child, leading to better educational and health outcomes.<\/li>\n\n\n\n<li><strong>Economic Growth<\/strong> \u2014 GDP per capita is increased due to a decrease in the dependency ratio.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-c335ea59cc07f591359a8b840951317b\" style=\"color:#015aa7\"><strong>Demographic Dividend of India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India, with its large and young population, is currently experiencing a demographic dividend.\n<ul class=\"wp-block-list\">\n<li>It is expected to last until 2055, providing India with a unique opportunity to boost its economic growth.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>India is expected to add another 183 million people to the working-age group between 2020 and 2050.<\/li>\n\n\n\n<li>This change in the age structure of the population can lead to a \u2018demographic dividend\u2019 of economic growth if it is accompanied by sustained investments in education and health, and policies that promote labour force participation.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Potential of India\u2019s Demographic Dividend<\/strong><br><br>&#8211; According to the <strong>IMF<\/strong>, the demographic dividend could add about 2 percentage points per annum to India\u2019s per capita GDP growth over the next two decades.<br>&#8211; A report by the <strong>Confederation of Indian Industry (CII)<\/strong> suggests that India\u2019s demographic dividend could boost India\u2019s GDP growth from the current $3 trillion to $9 trillion by 2030 and $40 trillion by 2047.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-a58857c0837c4d146b9dc76ffa4f5388\" style=\"color:#015aa7\"><strong>Need for Investment in Education and Health<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>According to the <strong>IMF\u2019s Asia and Pacific Department<\/strong>, if India really wants to benefit from this population adding to the labour force, it has to invest big time in both education and health.\n<ul class=\"wp-block-list\">\n<li>It emphasised that he would prioritise that much more so than other kinds of spending.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The labour force needs to have the right skills, competing with AI and other such challenges.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-9920dd2998e290fee7eddd39b6ccf2eb\" style=\"color:#015aa7\"><strong>Current Economic Scenario<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Growth in India was led by<strong> public investment and private consumption<\/strong>.<\/li>\n\n\n\n<li>While <strong>Public Capex<\/strong> spending (for example infrastructure) had a \u2018very beneficial\u2019 impact on growth, the issue was whether it had crowded in private investment.<\/li>\n\n\n\n<li>The IMF has projected a <strong>growth rate of 6.8% for India\u2019s economy in FY 2024\/25<\/strong> notwithstanding the high rate of unemployment among youth, which according to some estimates was just above 40% in 2022-23.\n<ul class=\"wp-block-list\">\n<li>According to the IMF, private investment is on the weaker side, and it is continuously improving and argued as good for the future.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-3f7090c8a871a0a0368a7503f9f31e23\" style=\"color:#015aa7\"><strong>Challenges and Associated Risks<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Lack of Job Creation:<\/strong> The World Bank has warned that South Asia, including India, is not making use of its demographic dividend as the pace of job creation in the region fell well short of the growth in the working-age population.\n<ul class=\"wp-block-list\">\n<li>Even before the Covid-19 pandemic hit, unemployment levels in India had hit a 45-year high.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Low Human Capital Base and Lack of Skills:<\/strong> Poor human capital formation is reflected in low employability among India\u2019s graduates and postgraduates.\n<ul class=\"wp-block-list\">\n<li>According to <strong>ASSOCHAM<\/strong>, only 20-30% of engineers find a job suited to their skills. It is a big challenge as skilling and reskilling are vital in current times because of the increasing new fields and opportunities.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The <strong>ongoing transformation <\/strong>of India\u2019s economy from primarily agrarian to more non-agrarian presents <strong>two challenges<\/strong>:\n<ul class=\"wp-block-list\">\n<li>Changing people\u2019s skills to transit from the agricultural sector to either manufacturing or services, and;<\/li>\n\n\n\n<li>Requiring workers to change location, as non-agricultural employment opportunities tend to be in urban centres far from rural India.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Health Crisis and Macroeconomic Shocks:<\/strong> With its large population, India faces many challenges, including coping with today\u2019s health crisis, creating more jobs, managing macroeconomic shocks and mitigating climate change.<\/li>\n\n\n\n<li><strong>Gender Disparity:<\/strong> While gender inequality remains an issue in many parts of India, there has been significant progress in recent years toward gender equality.\n<ul class=\"wp-block-list\">\n<li>It includes increasing levels of education and workforce participation among women, which can help to further increase the size and productivity of the workforce.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Inadequate Investment in Education and Health:<\/strong> To reap the benefits of the demographic dividend, India needs to invest heavily in education and health.\n<ul class=\"wp-block-list\">\n<li>It is crucial to equip the workforce with the right skills to compete in the modern economy.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-1e603a2ea607b35340e5267a97dffca5\" style=\"color:#015aa7\"><strong>Way Forward<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>To reap the benefits of the demographic dividend, India needs to invest heavily in education and health.<\/li>\n\n\n\n<li>It is crucial to equip the workforce with the right skills to compete in the modern economy.<\/li>\n\n\n\n<li>Forward-looking policies incorporating population dynamics, education and skills, healthcare, gender sensitivity, and providing rights and choices to the younger generation are needed.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Daily Mains Practice Question<\/strong><br><strong>[Q]<\/strong> How far do you think that investing in education and health sectors can help in capitalising on India\u2019s demographic dividend? Discuss the potential benefits and challenges.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.nextias.com\/ca\/wp-content\/uploads\/2024\/04\/Daily-Editorial-Analysis-19-04-2024.pdf\">Download PDF<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Recently, the International Monetary Fund (IMF) has suggested that India needs to focus on investing heavily in education and health to ensure that its growing, young population is adequately employed.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[],"class_list":["post-23944","post","type-post","status-publish","format-standard","hentry","category-editorial-analysis"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/23944","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=23944"}],"version-history":[{"count":5,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/23944\/revisions"}],"predecessor-version":[{"id":23957,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/23944\/revisions\/23957"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=23944"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=23944"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=23944"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}