Is India wasting away its demographic advantage?

Tue, 25 Nov Pre-Open

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In his trip to the United States, amongst various strengths asserted by the Prime Minister Narendra Modi in his speech, India's demographic strength stood above all. At a time when developing economies such as Japan, US and Europe are faced with an ageing population, India comes out as a relatively young nation. The International Labour Organization has estimated that the average age in India by the year 2020 will be 29 years as against 40 years in the US, 46 years in Europe and 47 years in Japan. Thus while the developed economies will be saddled with low productivity and higher security costs, India will boast of youthful and productive workforce. ILO has predicted that 116 million workers in the age group of 20-24 years will join India's workforce by 2020.

The huge addition to the workforce has the potential to revitalize the economic growth engine in future.

But herein lies the caveat. The youth have to be given the right education to prepare them for a constructive role in India's economic growth. But literacy levels in India are still low in certain parts of the country. Therefore, the government needs to pull up its socks in not only raising the literacy levels but also improving the quality of education being imparted to the children. The education system needs to be revamped giving students greater exposure to practical work experience.

Another area that requires immediate attention is the creation of new jobs. According to an economic survey by Organization of Economic Co-operation and Development (OECD), the percentage of the working age population that was employed fell from 58.4% in 1991 to 53.7% in 2012. But what is alarming is that the proportion of working age population decreased during the same time. It fell from 68.55% in 1991-95 to 56.04% in 2006-10. Employment ratios may have declined partly be due to falling participation of women in labour force that fell from 35.4% in 1991-95 to 30.9% in 2006-12. However diminishing employability points out to a deeper malaise of the country's inability to create adequate jobs for potential workers.

Therefore in the absence of proper education and employment, the country's burgeoning youth population is likely to be misled resulting in greater discontent and unrest in society. Therefore, unless these critical issues are not properly addressed by our policymakers, India's demographic boon is at the risk of turning into a bane.