Advantages of the Demographic Dividend in India

A Demographic Dividend is the growth potential resulting from the change in the population age structure in a country. Currently, India holds a total population of 1.39 billion and 62.5% of the population falls in the age group from 15-59 years. The population in this age group is intensifying and is estimated to be at its peak by 2036. These parameters show the available Demographic Dividend in India that started in 2005-06 and will end by 2055-56. According to the economic survey of 2018-19, the Demographic Dividend of India will peak about 20 years from now. In 2041, the share of the population between the ages of 20-and 59 is estimated to hit 59%.

What is the meaning of Demographic Dividend?

The United Nations Population Fund (UNFPA) defines the demographic dividend as follows; Demographic Dividend is the growth potential resulting from the change in the arrangement of the age of the population in a country, primarily when the segment of the working-age people (15 to 64 years) is further than the people of the population not working.

With fewer births each year, a country’s working-age population expands more significantly than the non-working-age population. With fewer children to support and more people in the workforce, an economy can reap significant economic growth when the economy makes the right social and economic policies.

Demographic Dividend of India

India is one of the few countries with youth around the globe. India’s median age is 28.4 years as opposed to 48.4 in Japan and 38 in China in 2020. Since 2018, India’s working-age population (between the years 15 and 64) has increased further than the other population group — people who are 14 or above 65. The Demographic Dividend transition results from the decrease in the total fertility rate (TFR). The opportunity for Demographic Dividend in India is obtainable from 2005-06 to 2055-56, per the United Nations Population Fund (UNFPA). The available time window of opportunity for the Demographic Dividend differs for each state in India, as the behavioural measures of the population are erratic or unpredictable. 

Advantages of the Demographic Dividend In India

• Demographic Dividend in India brings better economic growth and a rapid increase in economic activities due to a large working-age population and less non-working age population.
• It contributes to an increase in the labour force that increases the economy’s overall productivity.
• It creates increased fiscal space for investment in the human and physical infrastructure instead of spending on children.
• It gives rise to an increased women’s workforce, which can be a new source of economic growth.
• It increases the saving rate, as during working-age is when most of the saving is done.
• It has contributed to the overall growth of 15% in advanced economies. Japan is one of the first major economies to witness accelerated growth due to the change in the population structure. 
• Expansion in urbanisation and industrialisation due to a more significant number of people seeking employment increases economic activities.
• It leads to a workforce increase. With a working-age population of 65% of the total population, India will rise as an economic superpower and supply more than half of Asia’s potential workforce over the following decades.
• It contributes to effective policy making. Calibrating the plans and execution of programmes and schemes by articulating the population dynamics will likely result in more considerable benefits for people and socio-economic impact.

Conclusion

In conclusion, a Demographic Dividend is the potential of an economy for economic growth due to a change in the population’s age in a country, as the share of the working-age population is more than the non-working-age population share. India’s Demographic Dividend period is available from 2005-06 to 2055-56. We learned about the advantages of India’s Demographic Dividend, such as better economic growth and an increase in fiscal space and labour force.