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India’s Demographic Dividend

Prelims – Geography, Mains -GS1- Society

1. India’s demographics are the focus of the world. As populations in countries such as China, US, and Japan is getting older, India’s population is getting younger.

2. In theory, this increase in working-age population should generate a “demographic dividend" that can power economic growth.

3. According to research by the Reserve Bank of India (RBI), this will depend on India addressing its declining labour force participation rate.

Role of India’s population

1. Overall population growth is associated with lower economic growth, an increase in the working-age population is associated with higher growth.

2. Higher birth rates hurt labour supply by preventing women from joining the labour force and increasing the number of children in the economy.

3. The growth of the working-age population that matters for economic growth rather than the growth of the population.

4. India’s working-age population is now increasing because of rapidly declining birth and death rates.

5. India’s age dependency ratio, the ratio of dependents (children and the elderly) to the working-age population (14- to 65-year-olds), is expected to only start rising in 2040, as per UN estimates. This presents a golden opportunity for economic growth.

5. However, this growth will depend on those in the working-age population actually working. India’s labour force participation rate is declining, especially among rural youth (15- to 29-year-olds) and women.

6. To harness the power of its favourable demographics, it is critical to address this issue. India’s labour force needs to be empowered with the right skills for the modern economy.

Source: Live Mint