{"id":29692,"date":"2024-09-19T18:50:12","date_gmt":"2024-09-19T13:20:12","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=29692"},"modified":"2024-09-19T18:52:34","modified_gmt":"2024-09-19T13:22:34","slug":"indias-demographic-dividend-employment-challenges","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/19-09-2024\/indias-demographic-dividend-employment-challenges","title":{"rendered":"India\u2019s Demographic Dividend &amp; Employment Challenges"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>With 63% of its population in the working-age group and a median age of 28 years, India has a unique opportunity to harness its demographic dividend. However, realizing this potential requires overcoming significant employment challenges.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Analysis<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Economic Dimension:&nbsp;<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India is the world\u2019s <strong>fastest-growing large economy<\/strong> and the <strong>fifth-largest economy<\/strong> globally. The nation\u2019s <strong>demographic dividend<\/strong> presents an opportunity for sustained growth.<\/li>\n\n\n\n<li>At 55.2% in 2022 (ILO report), the LFPR is lower than desired. Economic growth has been driven by the <strong>services sector<\/strong>, which typically creates fewer jobs than manufacturing, resulting in a <strong>decline in labour intensity<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Challenges:<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Although India isn\u2019t experiencing jobless growth, the service-led growth pattern is insufficient to absorb the growing labor force.<\/li>\n\n\n\n<li>45% of the workforce remains in <strong>agriculture<\/strong>, which only contributes 18% to GDP. This indicates low productivity and underemployment in agriculture.<\/li>\n\n\n\n<li>Around 19% of the workforce is employed in unorganized, non-agricultural sectors with low productivity.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Social Dimension (Labour Market)<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Sectors like <strong>toys, apparel, tourism<\/strong>, and <strong>logistics<\/strong> are labor-intensive and hold potential for job creation, but they remain underdeveloped.<\/li>\n\n\n\n<li>Only <strong>4.4%<\/strong> of the workforce (15-29 years old) is formally skilled, indicating a vast skill deficit. This hinders employability and economic productivity.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Challenges:<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The informal economy employs a large share of the workforce but suffers from <strong>low productivity, lack of social security<\/strong>, and <strong>poor working conditions<\/strong>.<\/li>\n\n\n\n<li>The backbone of employment, <strong>Micro, Small, and Medium Enterprises (MSMEs)<\/strong>, are reluctant to scale up due to compliance burdens from outdated labor laws.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Technological Dimension<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The <strong>AI\/ML revolution<\/strong> poses a risk to repetitive, low-skill jobs, but also creates opportunities for <strong>high-skill jobs<\/strong> in emerging tech sectors.<\/li>\n\n\n\n<li>Despite India having the <strong>second-largest talent pool<\/strong> in AI globally, the current gap between demand and supply is 51% (NASSCOM).<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Challenges:<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Low-skill jobs are increasingly under threat due to automation, especially in sectors like manufacturing and services.<\/li>\n\n\n\n<li>There is a need for large-scale <strong>upskilling<\/strong> to prepare the workforce for a <strong>tech-driven economy<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Policy and Governance Dimension<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The <strong>impasse<\/strong> over the implementation of new labor codes is creating uncertainty, especially in labor-intensive sectors. Reform in labor laws is essential to ease compliance for MSMEs and attract investment.<\/li>\n\n\n\n<li>India\u2019s economic growth has been capital-intensive, while labor-intensive growth is more suitable for its demographic profile.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Challenges:<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Much of the reform agenda, particularly in manufacturing and labor markets, requires action from <strong>state governments<\/strong>. <strong>Coordination between the Centre and States<\/strong> is crucial.<\/li>\n\n\n\n<li>The <strong>Centre\u2019s influence in investments<\/strong> crowds out states, leading to inefficiencies in resource allocation.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Government Initiatives<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Make in India<\/strong>: Aims to promote manufacturing in India, creating jobs in labor-intensive sectors.<\/li>\n\n\n\n<li><strong>Skill India Mission<\/strong>: Focuses on <strong>upskilling<\/strong> the workforce to meet industry requirements, with a focus on youth and marginalized communities.<\/li>\n\n\n\n<li><strong>Production Linked Incentive (PLI) Scheme<\/strong>: Provides incentives to companies in manufacturing sectors to boost production and job creation.<\/li>\n\n\n\n<li><strong>PM Gati Shakti<\/strong>: Aims at <strong>integrated infrastructure development<\/strong> by coordinating between Ministries and States, enhancing logistics and connectivity.<\/li>\n\n\n\n<li><strong>National Apprenticeship Promotion Scheme (NAPS)<\/strong>: Encourages skill development through apprenticeship training programs with industry participation.<\/li>\n\n\n\n<li><strong>Startup India<\/strong>: Supports entrepreneurs and MSMEs in creating new jobs, with a focus on innovation and technological development.<\/li>\n\n\n\n<li><strong>Atmanirbhar Bharat Abhiyan<\/strong>: A comprehensive economic package focusing on self-reliance, including measures to support MSMEs and create employment.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Accelerating Reforms at State Level: <\/strong>States should lead the way in implementing labor codes to ease the regulatory burden on businesses and create an investor-friendly environment.\n<ul class=\"wp-block-list\">\n<li>Encouraging states with strong manufacturing ecosystems to drive <strong>labor-intensive industries<\/strong> will help absorb excess labor from agriculture.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Addressing the Skill Gap: <\/strong>Skilling must be seen as a <strong>lifelong process<\/strong>. <strong>Public-Private Partnerships (PPPs)<\/strong> must be scaled up to integrate <strong>industry-relevant skills<\/strong> into formal education and vocational training.\n<ul class=\"wp-block-list\">\n<li>As AI\/ML and automation expand, <strong>upskilling<\/strong> workers for <strong>high-skill tech roles<\/strong> is essential. Collaboration with tech companies will be crucial to build the required talent pool.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Boosting MSMEs: <\/strong>Streamlining compliance processes and providing incentives for MSMEs to grow and scale will lead to more job creation.\n<ul class=\"wp-block-list\">\n<li>Expanding access to affordable credit for MSMEs will help them invest in capacity expansion and improve productivity.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Leveraging AI\/ML: <\/strong>While AI\/ML will create new jobs, India must ensure <strong>appropriate regulations<\/strong> are in place to govern their use. <strong>AI\/ML education<\/strong> should be integrated into the national curriculum and skill development programs.<\/li>\n\n\n\n<li><strong>Promoting Labour-Intensive Sectors:<\/strong> <strong>Sectoral Focus<\/strong>: Special focus should be placed on <strong>high-growth potential sectors<\/strong> like <strong>toys, apparel, tourism<\/strong>, and <strong>logistics<\/strong> to create jobs and absorb unskilled labor.<\/li>\n\n\n\n<li><strong>Value Chain Upgradation<\/strong>: Gradually, sectors should move up the value chain, creating opportunities for <strong>higher-paying, skill-based jobs<\/strong> as the workforce matures.<\/li>\n\n\n\n<li><strong>Fostering Centre-State Cooperation<\/strong>: <strong>Collaborative Planning<\/strong>: The Centre and States must work in tandem on <strong>infrastructure projects<\/strong> like PM Gati Shakti, ensuring that state governments have the <strong>flexibility<\/strong> to design and implement region-specific solutions.\n<ul class=\"wp-block-list\">\n<li>Strengthening <strong>fiscal decentralization<\/strong> and empowering state governments to take ownership of job creation efforts will yield better results.<\/li>\n<\/ul>\n<\/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 can India ensure that its workforce is equipped with the skills needed to thrive in the age of automation and AI?<\/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\/09\/Daily-Editorial-Analysis-19-09-2024.pdf\">Download PDF<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>With 63% of its population in the working-age group and a median age of 28 years, India has a unique opportunity to harness its demographic dividend. However, realizing this potential requires overcoming significant employment challenges.<\/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-29692","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\/29692","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=29692"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/29692\/revisions"}],"predecessor-version":[{"id":29697,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/29692\/revisions\/29697"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=29692"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=29692"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=29692"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}