INDIA'S GROWING POPULATION

1. Context

2. Demographic Dividend

• 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.
• India has one of the youngest populations (62.5% of its population in the age group 15-59) in an ageing world.
• The demographic dividend leads to an increased labour supply that will increase the production of goods and boost savings and investment on the other.

3. Opportunities related to Demographic Dividend 

• The first benefit of the young population is the increased labour supply, as more people reach working age. However, the magnitude of this benefit depends on the ability of the economy to absorb and productively employ the extra workers.
•  As the number of dependents decreases individuals save more. This increase in national savings rates increases the stock of capital in developing countries and provides an opportunity to create the country’s capital through investment.
• Decreases in fertility rates result in healthier women and fewer economic pressures at home. This provides an opportunity to engage more women in the workforce and enhance human capital.
• Another opportunity is produced by increased domestic demand brought about by the increasing GDP per capita and the decreasing dependency ratio.
• This leads to demand-driven economic growth. Growth, education, better economic security, and a desire for more durable goods are the cause and consequences of young demographics.
• Increased fiscal space created by the demographic dividend enables the government to divert resources from spending on children to investing in physical and human infrastructure.
• Most sectors of the Indian economy would require a more skilled workforce than the present. It would be both a challenge and an opportunity for India to provide its workforce with the required skill sets and knowledge to enable them to contribute substantially to its economic growth.

4. The Pattern of Demographic Shift in India

• India's working-age population is rising and stood at 68% compared with 67.3% in 2020 and 66% in 2015, according to the UNFPA's State of World Population Report 2023.
• China, on the other hand, has a working-age population of 69%, but it is declining from 70.3% in 2020 and 73% in 2015.
• India's population in 2023 stood at 1,428.6 million compared to China's 1,425.7 million, according to the UN report on world population.
• While India is a young country, the status and pace of population ageing vary among states, according to the UNFPA. Southern states, which are advanced in demographic transition, already have a higher percentage of older people.
• These differences in age structure reflect differences in economic development and health, and remind us of states very different starting points at the outset of the 2030 sustainable development goals Agenda, according to the UN report.

5. Challenges of Demographic Dividend

• 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 in other developing countries. The mean years of schooling and expected years of schooling need to be improved.
• Poor human capital formation is reflected in low employability among India's graduates and postgraduates. According to ASSOCHAM, only 20-30% of engineers find a job suited to their skills. Thus, a low human capital base and a lack of skills are a big challenge.
• The informal nature of the economy in India is another challenge in reaping the benefits of demographic transition in India. Nearly 216 million people are engaged in the agriculture sector and are in the informal economy where not only do they earn lower wages, but with little social security and few days of employment in a year.
• There is a mounting concern that future growth could turn out to be jobless due to deindustrialisation, 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.
• 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 can create gainful employment opportunities for this working-age population.
• Declining female labour force participation: According to data from the International Labour Organisation and World Bank, India's female labour force participation rates have fallen from 34.8% in 1990 to 27% in 2013. Without women's participation India cant dream of reaping a demographic dividend.

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