In this concluding piece in the series, we now come to the most critical issue that will determine if India has a realistic chance of a demographic dividend
In the first story in this series, we examined how the latest report by the United Nations reveals that the population of India will overtake that of China by 2023, far earlier than initially estimated by demography exports. For every 1000 births across the world, India contributes 172 while China contributed 103. Nigeria is another big contributor with 57 births while the United States and Indonesia account for 31 and 30 respectively. The data clearly shows that at least when it comes to population, the 21 st century belongs to Asia. The second piece of the series raised concerns about how the high population growth will not automatically translate into the much talked about demographic dividend unless the productive skills of the working age population are not productively harnessed. The story provided data on how the participation of women in the labour force is among the lowest in the world.
In this concluding piece in the series, we now come to the most critical issue that will determine if India has a realistic chance of a demographic dividend. In simple terms, a demographic dividend is reaped when young and active citizens of a country work, earn incomes and help raise the GDP of the country. Over the last few decades, countries like South Korea, Indonesia, Malaysia, Thailand and most spectacularly China have enjoyed the demographic dividend. It should be India’s turn now.
But is the country ready for it? The accompanying chart shows how the working age population of the country has steadily grown since the turn of the century. This growth will be sustained till the mid of 1930s after which India like other countries will start showing a decline. So, the 900 million people in the working age population show a tremendous promise to propel India’s GDP on a high growth trajectory for at least a decade or more.
But where is the concern? The problem is that tens of millions of people in the working age category are not able to find work that matches their skills. Studies conducted by prestigious institutions like the Centre for Monitoring the Indian Economy reveal that not only is the unemployment rate very high high in India, but also that more than 30% of young and active citizens have simply dropped out of the labour force. The reason is simple: most young Indians want to complete a graduate course and seek white collar jobs. No country in the world has the ability to create so many white collar jobs. On the one hand, you have more than 10,000 Indians apply for just one white collar job. On the other, there is a shortage of skilled masons, electricians, mechanics, plumbers, carpenters and more.
Analysts are hopeful that the New Education Policy that lays great emphasis on skills rather than mere rote learning, will rectify this anomaly to a large extent in the future.