According to (UNFPA), demographic dividend means, “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 to 64) is larger than the non-working-age (<14 >65)”
Demographic Dividend in India has one of the youngest populations in an aging world. Since 2018, India’s working-age population has grown larger than the dependant population. This bulge in the working-age population is going to last till 2055.
Advantages Associated with Demographic Dividend
- Potential to generate more economic output due to Increased Labor Force ,if skills and job opportunities are available.
- Increased fiscal space created by the demographic dividend to divert resources from spending on children to investing in physical and human infrastructure.
- Rise in women’s workforce that naturally accompanies a decline in fertility, and which can result in women empowernment.
- Increase in savings rate, as the working age also happens to be the prime period for saving.
- Potential for Export-Oriented Growth: Countries with a large workforce can capitalize on labor-intensive industries and enhance their exports,
- Technological Advancement: A young and dynamic population can drive innovation, technological adoption, and entrepreneurship.
- Rapid industrialization and urbanization because of a higher number of employment-seeking individuals that would stimulate economic activities.
- Reduction in Dependency Ratio:reduces the economic burden on the productive segment, allowing for higher disposable income
Challenges Associated with Demographic Dividend
- Asymmetric Demography: Growth in the working-age ratio is concentrated in poorer states. which lack employment opportunities .
- Lack of Skills: India faces a low human capital base limiting its ability to leverage new opportunities.
- Unemployment : Jobless Growth due to factors like de-industrialization and technological advancements. As per the NSSO PLFS – 50 % working-age population remaining jobless.
- lack of infrastructure like transport, energy, and digital infrastructure can hamper economic growth,
- Pressure on Resources: A rapidly growing population puts a strain on natural resources, public services, and infrastructure
- Low Human Development: India ranks 130 out of 189 countries in the UNDP’s Human Development Index. often results higher disease, lower productivity.
- Environmental Degradation: Rapid urbanization and industrialization associated with demographic growth can lead to environmental issues like pollution, loss of biodiversity
- Political and Social Unrest: If the aspirations of a large youthful population are unmet due to lack of opportunities, it can lead to frustration, social unrest, and political instability.
Way forward
- Building human capital: Investing in people through healthcare, quality education, jobs and skills
- Empower with the right skills. Government has established the (NSDC) with the overall target of skilling/ up skilling 500 million people
- Academic-industry collaboration is necessary to synchronise modern industry demands and learning levels in academics.
- Job Creation and Economic Opportunities: Focus on labor-intensive sectors like manufacturing, agriculture, and services.
- Encourage the participation of women in the workforce by promoting gender-sensitive policies, equal pay, and providing maternity benefits
- Promote digital literacy and technological advancements to increase productivity and make the workforce more competitive
- Boost Infrastructure Development: Invest in critical infrastructure such as transport, energy, and digital infrastructure to support industrial growth
