Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Reaping our demographic dividend


From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: India's demographic dividend


  • India’s biggest strength is its ‘demographic dividend’ and people need to fully leverage it to fast-track the country’s progress in various sectors

Why in news

  • The 2022 edition of the World Population Prospects (WPP) of the United Nations has projected that India may surpass China as the world’s most populous country next year.
  • The report estimates that India will have a population of 1.66 billion in 2050, ahead of China’s 1.317 billion around that time.

What is demographic dividend?

  • Demographic dividend, as defined by the United Nations Population Fund, is “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population is larger than the non-working-age share of the population”.

Current status for India

  • India entered the demographic dividend opportunity window in 2005-06 and will remain there till 2055-56.
  • This is the period when the working age ratio is equal to or more than 150% and the dependency ratio is equal to or lower than 66.7%, generally taken as the cut-off for the demographic dividend window.

How India can leverage this dividend

(1) Investment in right direction

  • Investments in human and physical infrastructure will need to be scaled up dramatically to promote entrepreneurship and create jobs.
  • Investment in education is crucial for ensuring that working-age people are prepared for the demands of the economy.
  • Increase spending on health
  • Increase investments in Research and Development

(2) Absorption of labour into productive employment

  • Promote entrepreneurship and job creation
  • Service sector like tourism, logistics should be promoted
  • Skill development of the working-age population so that they can turn out to be productive for the country’s economy

Challenges in reaping this

  • Drastic quality improvement: India’s challenge is to create conditions for faster growth of productive jobs outside of agriculture, especially in the organized manufacturing and in services.
  • Severe shortages: India currently faces a severe shortage of well trained, skilled workers. Large sections of the educated workforce have little or no job skills, making them largely Unemployable.
  • Dismal health sector: A closer look implies various factors such as poor health which although obvious, play a major role in the poor performance of working population.
  • Socio economic dimensions: The status of institutions in India regarding caste discrimination, gender inequalities, widening income gap between the rich and the poor, religious differences, inefficient and slow legal system- all contribute to the poor standard of living of the masses.

Government steps

  • National Skill Development Corporation (NSDC): incorporated on 31st July, 2008, is a first-of-its-kind Public Private Partnership (PPP) in India set up to facilitate the development and upgrading of the skills of the growing Indian workforce through skill training programs.
  • National Skill Development Agency: Currently, skill development efforts are spread across approximately20 separate ministries, 35 State Governments and Union Territories and the private sector.
  • National Skill Certification and Money Reward Scheme: encouragement is given for skill development for youth by providing monetary rewards for successful completion of approved training programs.

Way forward

  • Strategies exist to exploit the demographic window of opportunity that India has today, but they need to be adopted and implemented.
  • The dreams of huge income flow and resultant economic growth due to demographic dividend could be realized only when we inculcate the required skills in the work force to make it as competent as its counterparts in the developed world.

Important data for mains

  • India’s working-age population has numerically outstripped its non-working age population.
  • India’s total fertility rate (TFR) has declined from 2.2 in 2015-16 to 2.0 in 2019-21, indicating the significant progress of population control measures, revealed the report of the fifth round of the National Family Health Survey (NFHS-5).
  • The TFR is the average number of children born to a woman in her lifetime.

Mains question

Q. Do you think the right has come that India should adopt moving away policy from population control towards reaping its demographic dividends? Critically examine.

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