India Has About A Decade Before The Demographic Dividend Runs Out! Let’s Spend It Wisely

Sujeeth Potla on Unsplash

Much has been said and written about Indias much vaunted Demographic Dividend. The term refers to a so-called “dividend” when a country’s youthful population provides it an “advantage” over its ageing rivals, which don’t have the pool of abundant human resources to meet the demand from employers, thereby stunting growth, as both domestic and international firms find it easier to locate facilities in the country where it is easy to find the necessary resources with skills, the advantage of age, and a steady replacement pipeline.

For much of the 90s and the first two decades of the Millennium, China was the envy of its Asian peers, with a median age under 30, leading to the Chinese economy becoming the “factory of the world”. India now has such a Demographic mix, with more than half of its population under 35, most of them, being even younger. Indeed, given the high percentage of graduates, and more importantly, technical education trumping over other streams, India’s Demographic Dividend does place it much ahead of any other nation, not only in Asia, but but worldwide.

However, we only have a decade before this “Trump Card” ceases to be of any use, as by 2035 or so, the population mix would “tilt” towards older workers and more so, with many of them nearing retirement age. Moreover, India’s “fertility rate” or the replacement rate, defined as the average number of children born to each couple, is now lower than 2, which is below the replacement levels for population growth.

Of course, the uneven nature of these “rates” across India, with the South leading the way ahead of the rather tardy progress in the north, bring their own challenges, especially in terms of migration and resource accessibility. In any case, there is a ready source of supply for jobs, provided they are created in the first place. More so, in the Southern metros, which have become a “magnet” for migrants from pan India. Apart from this, even Tier 2 and Tier 3 semi urban centers and towns have the capacity to cater to all types of jobs

So, all we need is for capitalists to flock to India to set shop, and it is Amritkaal, right? Not so fast, I would say. First, there is the question of employability. Nearly half of all engineering graduates lack job ready skills, and more than that falter in real world employment, due to both technical and soft skills. Next, the vast majority of India’s working age population (defined to be in the 20-60 age group) are either employed in low productivity sectors, with Agriculture and the Informal Economy accounting for 80 percent of the “officially” employed.

Third, the rather “distressing” statistic here is that 40 percent of Indian men of working age aren’t even “looking for jobs”, with a more alarming figure for women being 60 percent. This is the “desi” equivalent of The Great Resignation, making the Demographic Dividend look “positively depressing” (an Oxymoron of sorts!!). Perhaps the biggest challenge here is the Informal Sector, that essentially “absorbs” India’s unemployed, yet contributes marginally to the Indian Economy, which in recent years has become “An One Pony Trick”, largely powered by the services sector.

To wit, these four primary “challenges” and other minor obstacles to the Demographic Dividend, need urgent redressal and attention on a war footing. Otherwise, India will end up as a Failed State, having “failed” its youth, as well as itself, with social unrest becoming the norm. Already there are enough signs that India’s “restless” unemployed are taking to the streets for even the most trivial reason. How long before they turn on each other and the rest in a “race of attrition” making us resemble a Central African country, rather than the “dream place” of Amritkaal, and being a Vishwaguru to boot?


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