Issues related to Economic growth

How India can leverage its biggest strength?


From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: India's demography: opportunity or disaster, challenges and priorities


Central Idea

  • India’s greatest strength lies in its vast manpower. In the coming 25 years, the country has the potential to experience a golden era, provided it effectively utilizes its favorable demographic composition.

Relevance of the topic

The current population of India is 1,420,681,800, based on Worldometer elaboration of the latest United Nations data.

The growth is driven by India’s large, dynamic and young population, with 65% of Indians being under 35 years old.

However, one of the greatest challenges facing young India’s is unemployment. This raises core question is this an opportunity or demographic disaster

There is a need to create opportunities for the existing labour force and the new entrants into the labour market by improving their productivity.

India’s Demographic Advantage

  • Young Workforce: India’s average age of 29 years, compared to countries like the US (38), China (38), France (42), Germany (45), and Japan (48), highlights its advantage of having a younger population, which can contribute to economic growth and productivity.
  • Favorable Dependency Ratio: The projected old-age dependency ratios indicate India’s advantage in terms of a smaller proportion of the population requiring support from the working-age population. For instance, while India’s projected old-age dependency ratio is 37% in 2075, France is projected to have 55.8%, Japan 75.3%, the US 49.3%, the UK 53%, and Germany 63.1%.
  • Rising Working-Age Population: India is currently in a phase where its working-age population is increasing, presenting a potential workforce that can drive economic growth and development for several decades.
  • Potential for Labor Supply: With its large population and a growing workforce, India has the potential to become a significant source of labor supply for the rest of the world. This can attract investment and outsourcing opportunities, further boosting economic growth.
  • Abundant Human Capital: India possesses a vast pool of educated and skilled individuals, which contributes to its human capital advantage. This workforce can drive innovation, productivity, and economic competitiveness across various sectors.
  • Consumer Market: India’s large population provides a substantial domestic consumer market, offering significant opportunities for businesses to cater to the needs and demands of a vast consumer base, driving economic activity.
  • Innovation and Entrepreneurship: The young and dynamic population in India fosters a culture of innovation and entrepreneurship, contributing to the development of new industries, technologies, and solutions, creating employment opportunities and driving economic progress.
  • Potential for Economic Growth: By effectively utilizing its demographic advantage, India has the potential to achieve higher rates of economic growth and improve its standard of living.
  • Global Competitiveness: A young and skilled labor force enhances India’s competitiveness in the global market, attracting foreign investment, promoting export-oriented industries, and positioning India as a preferred business and investment destination.
  • Demographic Dividend: India’s favorable demographic composition presents the opportunity to unlock the demographic dividend, leading to accelerated economic growth and development through investments in education, skill development, healthcare, and employment opportunities.

Lessons learned from Asian success stories accordingly

  • Harnessing the Demographic Dividend: Asian countries like China, Japan, South Korea, Malaysia, and Singapore have effectively utilized their favorable demographics to drive economic growth and development. India, with its young workforce, can learn from these examples and focus on maximizing the potential of its demographic dividend.
  • Focus on Labor-Intensive Manufacturing: Asian success stories have demonstrated the importance of capitalizing on labor-intensive manufacturing sectors to create employment opportunities. India can prioritize these sectors, such as textiles, toys, footwear, auto components, and agricultural processing, to leverage its abundant labor force.
  • Structural Transformations: Asian nations have undergone structural transformations by transitioning from labor-intensive industries to more advanced sectors. India can learn from these examples and emphasize technological advancements, innovation, and high-value manufacturing to sustain economic growth and enhance competitiveness.
  • Investment in Infrastructure: Developing robust infrastructure is crucial for economic growth. Asian countries have recognized the significance of infrastructure development in reducing trade and transaction costs, improving connectivity, and attracting investments. India should focus on infrastructure development to support its economic growth objectives.
  • Trade and Investment Facilitation: Asian success stories have implemented trade facilitation measures and pursued policies to attract foreign direct investment. India can learn from these experiences by adopting measures to facilitate trade, improve ease of doing business, and create a favorable investment climate.
  • Support for MSMEs: Micro, Small, and Medium Enterprises (MSMEs) play a pivotal role in the manufacturing sector. Asian countries have provided support to MSMEs to enhance their competitiveness, scale, and integration into global supply chains. India can prioritize support for MSMEs to drive manufacturing growth and job creation.
  • Emphasis on Skill Development: Asian success stories have recognized the importance of skill development in enhancing labor force productivity. India should invest in skilling initiatives, re-skilling, and up-skilling programs to improve employability and align the workforce with evolving industry demands.
  • Quality Education and Healthcare: Asian nations have prioritized investments in quality education and healthcare. India can learn from these examples by focusing on improving access to quality education and healthcare services, which will contribute to a skilled workforce and a healthy labor force.
  • Government Reforms and Policies: Asian success stories have been supported by proactive government reforms and policies. India should implement favorable policies related to labor laws, taxation, ease of doing business, and intellectual property rights to create an enabling environment for economic growth and entrepreneurship.
  • Long-term Vision and Implementation: Asian countries that have achieved sustained success have demonstrated long-term vision and commitment to implementing policies and reforms. India should adopt a similar approach by formulating long-term strategies and ensuring consistent implementation to drive sustainable economic growth.

What India needs to capitalize on its demographic dividend?

  • Skilling and Education: India needs to focus on skill development programs such as the Jan Shikshan Sansthan, the Pradhan Mantri Kaushal Vikas Yojana, and the National Apprenticeship Promotion Scheme. These programs have shown success in increasing human resource supply in various sectors. However, efforts should be made to upscale and improve the skills of the labor force, especially in the unorganized sector where underpaid jobs prevail.
  • Job Creation and Employment Opportunities: India should prioritize sectors with high labor intensity, such as textiles, toys, footwear, auto components, sports goods, agricultural processing, restaurants, hotels, mining, construction, healthcare, and caregiving services. These sectors have significant potential for employment generation. Additionally, the focus should be on infrastructure development to reduce trade and transaction costs and create an environment conducive to doing business.
  • Industry and Infrastructure Development: India should accelerate infrastructure development to support economic growth and enhance competitiveness. This includes investment in transportation, energy, digital connectivity, and other critical infrastructure sectors.
  • Ease of Doing Business: To attract investments and promote entrepreneurship, India should continue its efforts to improve the ease of doing business by simplifying regulatory processes, reducing bureaucratic hurdles, and enhancing transparency.
  • Social Security and Healthcare: India should work towards improving access to quality healthcare services and implementing robust social security programs. Measures like the Ayushman Bharat and Pradhan Mantri Bhartiya Janaushadhi Pariyojana mentioned in the article can help in achieving these goals.
  • Government Reforms and Policies: Implementing favorable labor laws, rationalizing taxation systems, and providing policy stability are essential for creating an enabling environment for economic growth. There is importance of reforms such as the National Education Policy 2020, which aims to update knowledge and ensure productive employment opportunities.

Way Forward: Priority areas

  1. Improving Education Quality:
  • India should prioritize the implementation of the National Education Policy 2020, which emphasizes knowledge updating and aims to provide inclusive, equitable, and quality education at all levels.
  • Steps should be taken to address challenges such as non-functional schools, resistance to change, and inadequate resources.
  • Providing access to quality education up to higher secondary levels for all is essential to create a productive labor force.
  1. Ensuring Quality Healthcare:
  • The government should continue implementing initiatives like Ayushman Bharat and the Pradhan Mantri Bhartiya Janaushadhi Pariyojana to improve healthcare equity.
  • Efforts should be made to make drug prices affordable and accessible, and steps should be taken to ensure financial medical protection, such as universal insurance and adequate medical infrastructure.
  • Quality health infrastructure for all will contribute to a healthy and productive labor force.
  1. Accelerating Reforms for Future Success:
  • India should accelerate the implementation of reforms and flagship programs to unlock its demographic dividend and drive economic growth.
  • Streamlining bureaucratic processes, improving ease of doing business, and creating an investor-friendly environment are essential to attract investments and foster entrepreneurship.
  • Additionally, continued infrastructure development, trade facilitation measures, and reforms in labor laws and taxation systems will support the growth of industries and enhance India’s competitiveness in the global market.


  • India’s demographic dividend offers a unique opportunity for growth and development in the coming years. By prioritizing skill development, creating employment opportunities, enhancing productivity, ensuring access to quality healthcare and education, and implementing crucial reforms, India can fully harness its demographic advantage. The nation has the potential to become a global labor force supplier and secure a prosperous future.

Also read:

India’s Population Growth: Dividend or a Disaster?

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