In age of 29 years. The declining

In the recent years, India’s
demography has been undergoing a certain noticeable change. It is estimated
that by the end of the next century, India will have a very young population
with an average age of 29 years. The declining fertility rates and death rates
have contributed to turning the country into one of the youngest countries
there is and India is, thus, blessed with a huge working age population. It is
predicted that there would soon be a ‘bulge’ (Chandrasekhar, C., Ghosh, J.,
& Anamitra Roy Chowdhury, 2006) in the working age category (15-60years).
This ‘bulge’ is generally known as the demographic dividend. The demographic
dividend, or the period of demographic dividend, is a phase in the demographic
transition of a country wherein there is a gradual increase in the working age
population and the growth rate of this population is much higher than that of
the dependent population (Below 15 and above 60) due to the falling birth and
death rates. In other words, the dependency ratio, i.e., the ratio of the
dependent population to the independent population is at an all-time low.  

The demographic dividend is a
once in a lifetime event in the development process of the country which
creates a huge potential for the rapid growth of the economy. During this
phase, the size of the working population in the economy is high which leads to
increased savings and investment as well as a reduction in the unproductive
consumption. It is hypothesized that when the ‘demographic dividend’ is
realised by an economy, it will undergo a period of accelerated growth and
prosperity. This has been observed in the case of several economies, especially
the four Asian Tigers- Hong Kong, Thailand, Singapore and South Korea. In the
period following the second world war, these newly independent countries,
experienced a change in their demographics and attained their demographic
dividend faster than other economies. They witnessed a period of high growth
coupled with increase in productivity. The increased workforce size enabled
them to expand their manufacturing and industrial sector through properly
channelled investment.

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Although policies and other efforts
of the government played an important role in the growth of these economies, it
is important to remember the contribution of the dividend and the potential it
created. Thus, if we look at the past experiences of our fellow Asian
countries, we can be hopeful that the realisation of the dividend in India can
bring about fruitful results for the economy.

However, as Bloom and Canning
have rightly said, “Both empirically and theoretically there is nothing
automatic about the link from demographic change to economic growth. Age
distribution changes merely create the potential for economic growth. Whether
or not this potential is captured depends on the policy environment” (Bloom and
Canning, 2004: 22-23). Here is where the main question arises, will India with
its huge population, extensive inequalities, growing unemployment, extremely
low rates of literacy, and other socio-economic problems, be able to take the
advantage of its once in a lifetime dividend or will it turn out be a
demographic nightmare?

As of now, the future seems very dreary.
India’s death rates and birth rates, and consequently the dependency ratio, have
been declining since the last 4 decades which an indication enough that the
demographic dividend is soon approaching. However, the efforts made by
successive governments have not been enough to ensure that the nation will be
able to harness the full potential of this dividend. There are three major reasons
behind this.

First, there is a huge working
age population that already exists in the economy which is not absorbed even
now. In a study conducted by BSE in collaboration with CMIE, it was found that
at the end of the previous year, 2017, the unemployment rate in rural India was
4.59 whereas that of urban India was as high as 5.47%. There is a slowdown in
job creation and India is said to be going through a period of jobless growth.
At the same time, the efforts of the government to boost employment especially
among the youth through policies like Make in India and Start-up India have
failed to deliver results. According to the Asia-Pacific Human Development
Report, 2016, India will face a severe shortage of jobs in the next 35 years.
This is problematic because in the coming years, India’s working age population
is going to be higher than ever before. If the shortage continues to persist,
the country will not be in a position to take advantage of its dividend.
Instead it will be burdened by a huge young, jobless population leading to a
lot of political and economic unrest.

Another factor when it comes to employment
that is troublesome for the economy is low female force participation rates,
which is one of the lowest in Asia. Generally, during demographic transition
when the fertility rates decline, women are more inclined to join the labour
force. However, in spite of declining fertility rates, the women in the country
have refrained from joining the workforce due to cultural and socio-economic
constraints. This is a crucial cause that needs to be tackled mainly because a
country cannot hope to achieve high levels of growth if nearly half of its
population is actively excluded from the labour force. 

Secondly, India does not boast of
good, healthy development indicators. According to the UNDP report 2016,
India’s rank is 131 out of the 188 countries ranked in terms of Human
development. India’s life expectancy at birth is 68 years, much lower than what
is seen in other developing countries. For e.g. China has a life expectancy of
76 years where as Sri Lanka’s is almost 75 years. This reflects the state of
poor health and hygiene facilities in India. India’s GNP per capita (PPP US$
5663) is also very low and below the south Asian average. India lacks behind
even in terms of education. It’s expected years of schooling is just 11.7 years
whereas mean years of schooling is as low as 6.3 years. In the 70 years since
independence, very little focus has been given to primary education leading to
the creation of greatly uneducated and fairly unproductive labour. These
factors are important to develop a healthy and a productive workforce. A workforce
that is unhealthy, ill-fed and does not have enough training and education cannot
a resource for its economy.

Finally, a huge chunk of India’s
population comes under unskilled labour. According to an NSDC report, the major
chunk of the population entering the work force every month falls in the
category of unskilled labour. There is a severe skills deficit in the economy
leading to a huge skills mismatch. In the India skills report 2017 published by
Wheebox, it was found that only 2/5th of the students entering the
job market meet the employer’s requirement. 
This can be attributed to poor proficiency in English and lack of even
basic computer skills prerequisite for any job in the current day and age. The
12th five-year plan laid major emphasis on the skills aspects and
aimed to create a high-quality workforce. Skill India, the major policy
enforced by the government to tackle the skill deficit, has improved the
condition slightly but we are still nowhere close to the ideal situation.

These factors taken together
paint a very worrisome picture of the coming years. India is a major supply of
labour for countries all over the world. It has a huge talent pool no doubt but
the quality of the workforce is exceedingly questionable. Therefore, it is of
utmost importance that we look to our South Asian neighbours, the Asian tigers,
and learn from their experience. These countries at independence also faced
problems similar to our but through rigorous efforts of the government like
heavy investment in health facilities, primary and higher education, and
creating a suitable environment for the female labour force, the countries
managed to achieve the impossible. Thus, despite the frightening picture, there
is still hope for that India will be able to harness the full potential of its
dividend given that it acts quickly and meticulously.