IN NEWS: To reap its demographic dividend before it becomes too late, India must create jobs in manufacturing
1.Critically examine the concept of India’s demographic dividend and discuss the factors that threaten to diminish its potential in the coming decades.
With 75% of its population within this working-age group, India has long been touted as a country poised to reap the benefits of its demographic structure, especially after the economic liberalization of the 1990s.
A demographic dividend occurs when the number of people in the working-age population grows relative to the dependent population (children and elderly). It creates an opportunity for economic growth because:
● More workers contribute to higher productivity.
● Increased savings and investments due to a large working population.
● Opportunities for human capital development as more individuals participate in the labor force. In theory, India could leverage this demographic advantage to achieve high economic growth and potentially become a global economic leader.
Threats to the Demographic Dividend:
- Declining Total Fertility Rate (TFR):
● India’s TFR has decreased from 2.6 in 2010 to 1.99 today, with projections indicating further decline in the coming years. - Aging Population:
● By 2050, India’s elderly population (aged 60 and above) is expected to rise significantly. As the population ages, the proportion of dependent individuals will increase, and the burden on the working population will grow, diluting the economic benefits of the demographic dividend. - Stagnant Manufacturing Sector:
● Factors like poor infrastructure, complex regulatory frameworks, lack of access to land, and high labor costs have constrained growth in the manufacturing sector. - Education and Skill Gap:
● India’s education system has been criticized for producing graduates who lack the skills required for modern industries, leading to a large number of unemployed or underemployed youth. - Urbanization and Infrastructure Challenges:
● As rural areas continue to experience a population boom, the strain on existing infrastructure and services, such as education, healthcare, and housing, will intensify. - Gender Inequality:
● According to recent reports, only three out of 10 working-age women are in the labor force. Socio-cultural factors, inadequate access to education and healthcare, safety concerns, and a lack of suitable employment opportunities contribute to this gender disparity. - Political and Economic Instability:
● Political instability, policy inconsistency, and regulatory challenges can create a hostile environment for investment, job creation, and innovation.
● Issues such as corruption, inadequate healthcare, and bureaucratic inefficiency can further exacerbate the challenges.
To mitigate these risks, India must focus on:
- Expanding and reforming the manufacturing sector to create jobs.
- Improving the quality and accessibility of education and skills training to make the workforce more adaptable and productive.
- Promoting gender equality in the labor market.
- Investing in infrastructure and urbanization to accommodate the growing population.
- Preparing for the demographic shift towards an aging population by expanding social security, healthcare, and pension systems.
While India’s demographic dividend presents a significant opportunity for economic growth, it is not guaranteed. Several interrelated factors, including a declining fertility rate, an aging population, high unemployment, a stagnating manufacturing sector, and insufficient investment in education and skill development, pose serious risks to realizing the full potential of this demographic advantage.
PYQ:
- How do you explain the statistics that show that the sex ratio in Tribes in India is more favourable to women than the sex ratio among Scheduled Castes? (UPSC Mains 2015)
- Why do some of the most prosperous regions of India have an adverse sex ratio for women? Give your arguments. (UPSC Mains 2014)
SOURCE: