India’s Demographic Dividend
What is a Demographic Dividend?
Increase in working population and decline in dependents
Resources get freed up and invested in other areas to accelerate economic development
This is accompanied by a decline in fertility and mortality rates
It refers to the growth in an economy that is the result of a change in the age structure
Main areas of demographic dividends
With fewer births, parents are able to allocate more resources per child
More workers are added to the labor force, including more women
Low dependency ratio increases per capita income in long run
Personal savings grow and can be used to stimulate the economy
Opportunities Created
Up-skilling of population of working ages
Better productivity and high income
Faster economic growth can be achieved
With time the share of the older population rises and that of the working-age population begins to fall
India is in the middle of a demographic transition
Need for forward-looking policies
Population may turn into liability
Challenges to overcome
Lack of a skilled labor force
Lack of public investment
Jobless growth
Informal nature of economy
Unemployment
Policies should incorporate population dynamics, education and skills, healthcare, gender sensitivity, and providing rights and career choices to youth
Without proper policies DD may get wasted
Lessons for India
Health spending has not kept pace with India’s economic growth
We need to provide universal access to high-quality primary education and basic healthcare
India ranks poorly in Asia in terms of private and public human capital spending
The gender inequality of education is a concern
National Transfer Accounts (NTA) assessment: India’s per capita consumption pattern is way lower