What steps are required to convert India’s demographic liability into demographic dividend?
Since 2018, India’s working-age population (people between 15 and 64 years) has grown larger than the dependent population - children aged 14 or below as well as people above 65 years of age. This bulge in the working-age population is going to last till 2055, or 37 years from its beginning. It is important to note that this change in population structure alone cannot push growth. The country needs to take steps to make sure that the demographic advantage acts as a dividend and not as a liability.
Economic stability of a household is the first step towards healthy growth of infants and youth. By reducing income inequality, demographics can be converted into an asset and a dividend. Financial inclusion and better penetration of financial services can also help in improving economic stability of households, thus contribute towards demographic dividend.
Skilling of the youth and holistic development of their skills, including financial and technological skills can help turn them into an asset in a digital & financial world. Presently, there is a wide gap between demand of the industry and skills learned by students. Filling the gap can help in conversion of youth into demographic dividend.
Fertility rate of India, at 2.24% is still above the WHO recommended replacement rate of 2.1%. In order to create demographic advantage, we need to put a cap over population explosion in India. Only then we can efficiently focus on the present youth population.
It’s important to incentivize firms to hire more and expand. Present set of laws dis-incentivize companies to expand. For example, there have been more than 29 labor laws in India to regulate hiring and firing of employees. Multiple labor laws have resulted in high exploitation of both workers and enterprises, resulting in movement towards capital intensive industries.
The productivity of people in developed countries is higher due to access of better and cheaper health services. It is important to provide high quality universal healthcare to the youth so that they can grow into healthy and productive employers and employees.
Demographic liability can be converted into a dividend by inculcating a culture of self-employment, in order to provide domestic employment opportunities and take forward make in India.
With the onset of Industrialization 4.0 in the present digital environment, human capital is the key to development of a nation. India can transform itself into a developed nation, if it takes forward the task of developing its youth. The youth will take care of the rest!