Demographic dividend

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Population dividend

Context

The UN report, World Population Prospects 2022, forecasts that the world’s population will touch eight billion this year and rise to 9.8 billion in 2050. What is of immediate interest to India is that its population will surpass China’s by 2023 and continue to surge.

India’s potential workforce and growth as projected by consulting firms

  •  Deloitte’s Deloitte Insights (September 2017) expects “India’s potential workforce to rise from 885 million to “1.08 billion people over the next two decades from today”, and “remain above a billion people for half a century,” betting that “these new workers will be much better trained and educated,” than their existing counterparts.
  • McKinsey & Company’s report, ‘India at Turning Point’ (August 2020), believes the “trends such as digitisation and automation, shifting supply chains, urbanisation, rising incomes and demographic shifts, and a greater focus on sustainability, health, and safety are accelerating” to “create $2.5 trillion of economic value in 2030 and support 112 million jobs, or about 30% of the non-farm workforce in 2030.”
  • Four pillarsIn its May 14, 2022 issue, The Economist had this to say about India, “As the pandemic recedes, four pillars are clearly visible that will support growth in the next decade. The four pillars are:
  • 1) The forging of a single national market.
  • 2) An expansion of industry owing to the renewable-energy shift and a move in supply chains away from China,
  • 3) Continued pre-eminence in IT.
  •  4) High-tech welfare safety-net for the hundreds of millions left behind by all this.
  • The Financial Times in an article, ‘Demographics: Indian workers are not ready to seize the baton’, believes that India’s bad infrastructure and poorly skilled workforce will impede its growth.

Comparing India’s preparedness with China’s in 1970s

  • China is enduring an ongoing population implosion, which by 2050, will leave it with only 1.3 billion people, of whom 500 million will be past the age of 60.
  • India’s population, by contrast, would have peaked at 1.7 billion, of whom only 330 million will be 60 years or older.
  • Simply put, India is getting a demographic dividend that will last nearly 30 years.
  • There is so much going on for India today compared to China, the only country it can be reasonably compared to.
  • It is still a young country and in a much better position to transform itself compared to China of the 1970s.
  • It is still an open society where mass protest matters and produces results.
  • Indians have not been traumatised as Chinese were at the time of Mao Zedong’s death.
  • IT backbone: The IT technologies now available in India, and most importantly the Internet they run on have matured exponentially.
  • Many things right from video conferencing to instantaneous payments and satellite imaging are getting better and cheaper by the day.
  • Better administrative system: Creaky and inadequate as they are, India’s administrative systems manage to deliver and its infrastructure is in far better shape today than it was for China at the start of its reforms.
  • No rural urban divide: India does not have a Hukou system which in China tethers rural folk to rural parts creating a deep divide between a small and prosperous urban China and a much larger, very deprived rural China.

Way forward for India

  • To wring the best out of its demographic dividend, India needs to invest massively in quality school and higher education as well as healthcare across India on an unprecedented scale, literally in trillions of rupees between now and 2050 when it would have reached the apogee of its population growth.

Conclusion

India must seize the moment and not be incremental in its approach. Given the will it can initiate and see through a transformation that will stun the world, even more than China’s has so far.

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