According to the United Nations Population Fund (UNFPA), a demographic dividend refers to “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15–64) is larger than the non-working-age population (<14 and >65).”
India, with one of the youngest populations in the world, has witnessed its working-age population surpass the dependent population since 2018. This demographic bulge is expected to continue until 2055, presenting a unique economic growth opportunity if leveraged properly.
Advantages of Demographic Dividend
- Increased Labor Force & Economic Output
A larger working-age population can boost productivity if skills and job opportunities are available. - Enhanced Fiscal Space
Reduced dependency allows resources to shift from spending on children to investing in infrastructure, education, and healthcare. - Women Empowerment
Declining fertility rates often lead to greater female workforce participation, promoting gender equality and empowerment. - Higher Savings Rate
Working-age individuals typically save more, supporting investment and economic growth. - Export-Oriented Growth
A large labor force can enhance labor-intensive industries, improving exports. - Technological Innovation & Entrepreneurship
A young, dynamic population drives innovation, adoption of technology, and startups. - Industrialization and Urbanization
More employment-seeking individuals stimulate industrial and urban growth, fostering economic activity. - Reduced Dependency Ratio
Lower economic burden on the productive segment allows higher disposable income and consumption.
Challenges in Leveraging Demographic Dividend
- Asymmetric Demography
Working-age growth is concentrated in poorer states with limited job opportunities. - Lack of Skills
Low human capital restricts the ability to capitalize on modern industry requirements. - Unemployment
Jobless growth is a concern; NSSO PLFS data shows 50% of working-age population remain unemployed. - Infrastructure Deficits
Limited transport, energy, and digital infrastructure hampers economic development. - Pressure on Resources
Rapid population growth strains natural resources and public services. - Low Human Development
India ranks 130/189 in UNDP’s Human Development Index, affecting productivity and health. - Environmental Degradation
Urbanization and industrialization threaten biodiversity and increase pollution. - Political and Social Unrest
Unmet aspirations of youth can lead to frustration, unrest, and instability.
Way Forward to Harness Demographic Dividend
- Invest in Human Capital
Prioritize healthcare, quality education, and skill development. The National Skill Development Corporation (NSDC) aims to skill or upskill 500 million people. - Academic-Industry Collaboration
Align curricula with industry demands to ensure job-ready graduates. - Job Creation & Economic Opportunities
Focus on labor-intensive sectors like manufacturing, agriculture, and services. - Women Workforce Participation
Promote gender-sensitive policies, equal pay, maternity benefits, and safe workplaces. - Digital Literacy & Technology Adoption
Increase productivity and competitiveness through digital skills and technology integration. - Infrastructure Development
Invest in transport, energy, and digital infrastructure to support industrial growth and urbanization.
Conclusion
India’s demographic dividend represents a once-in-a-generation opportunity to accelerate economic growth and social development. By investing in human capital, creating jobs, enhancing infrastructure, and empowering women, India can transform its youth bulge into a sustainable economic advantage, driving prosperity for decades to come.