How real are India’s demographic dividends?

  • 31 Jul 2023
  • Read 5 mins read

Demographics – China versus India

In the early 1970s, China witnessed a rapid boom in population demographics. This opened a colossal window of opportunity to reap the benefits of their demographic dividends for at least the next 50 years. To be fair, China left no stone unturned in realizing the full potential of its demographic dividends. This catapulted China to become the second-largest global economy after the US.

In contrast, India entered the demographic dividend opportunity window only in 2005. At this point, India has made progress but such progress has been rather halting. At the current juncture, India has crossed China to become the most populous country in the world. That is indication that; from here on, population growth rate is bound to decrease with better life expectancy and declining birth rates. Has India missed out on a golden opportunity?


Firstly, what are demographic dividends?

A demographic dividend occurs in an economy when the ratio of working-age population is high and dependency ratio (in terms of elders and children) is low. This huge advantage can create vast arrays of resources to increase investments, ameliorate standard of living and perpetuate growth. But to harness these dividends, the economy needs to offer the right conditions, or at least, create the right conditions including a healthy population, educated youth, skilled workforce, employment opportunities and no regressive catechisms. How did India fare vis-à-vis these conditions?

Why India’s demographic dividends have been lacklustre?

As per the National Family Health Survey (NFHS), over 35% of children are stunted in India. That is indicative of poor health, poor education, and poor professional prospects in later life. The same survey also shows that over half the female population between 15 and 49 are anaemic. On the skill development front, only 3% of the Indian workforce is adept with any form of vocational training as per CII. This diminishes the chances of increased productivity or high-quality gainful employment. 

India is yet to address these challenges. There is still just 2.9% of the GDP being invested on education as compared to the required 6%. Public expenditure has merely been 1% of the total GDP, while even the Finance Commission had recommended this to be at 2.5% of GDP by 2025. Unemployment levels are at 8.5%, and many are unable to find good jobs in secondary and tertiary sectors. Hence, share of workers in agriculture rose retrogressively from 43% to 47%. 

Is India running behind the demographic dividend game?

The Honourable Prime Minister has regularly mentioned the significance of reaping demographic dividends in his speeches. The Centre has already started working towards boosting the economy through various upliftment schemes, PLI scheme, support for renewable energy and artificial intelligence (AI) etc. It is high-time that a task force on demographic dividends is instituted under able leadership. This task force can have representation from population, health, education, and development fields, with constant review and monitoring.

In addition, special focus on north and central states is the need of the hour. They are expected to account for over 50% of the India’s population accretion. between 2011 and 2036. As per the National Commission on Population (NCP), this boom will occur in Bihar, Uttar Pradesh, West Bengal, Maharashtra, and Madhya Pradesh. Balanced development would be the key to avoiding high levels of migration of youth from north-central states to the greying southern and western states.