Demographic Dividend in India

According to the United Nations Population Fund, also known as UNFPA, the demographic dividend is the overall economic growth potential that results from a change in the population’s age structure. This happens mainly when the share of people between 15 and 64 is larger than the non-working population. The non-working population comprises children below 14 and adults above 65. Around 62.5% of India’s population comes under the age group of 15-59 years. It means that the demographic dividend in India will last till 2055-56. 

According to a survey conducted in 2018, India’s demographic dividend is most likely to peak around 2041. During this time, the working-age population is expected to reach 59%. To understand its implications, let’s delve into understanding demographic dividends further. 

What is the Demographic Dividend? 

As mentioned above, the demographic dividend is a country’s growth potential resulting from the population’s age structure shift. If a country witnesses fewer births every year, its working-age population grows compared to the young dependent population. If appropriate policies and economic investments are introduced in sectors like education, health, and governance, it opens doors for unmatched opportunities. There are several reasons behind changes in age structure in a given population. These include – 

• Falling birth rate
• Increased longevity
• Lower fertility rate

Although a lower fertility rate and a falling birth rate will minimise the country’s expenditure, increased longevity will contribute to the country’s working-age population. 

Demographic Dividend in India 

India is the second most populated country after China, with one of the youngest populations. By 2020, the median age in India was 28, compared to countries like China and the USA with 37, Western Europe with 45, and Japan with 49. 

Since the year 2018, the working-age population of India has grown immensely compared to the dependent population. This is mainly because of the fall in the total fertility rate or the TFR. Two interesting facts were concluded through a study conducted by the United Nations Population Fund on the demographic dividend. These include – 

• India’s demographic dividend opportunity ranges from 2005-06 to 2055-56. It is more than all countries in the world. 

• The demographic dividend window is present in different states at different times. This happens because of the changes in population behaviour. 

Advantages of Demographic Dividend 

Economic growth 

An increase in the economy is one of the most notable results of a demographic dividend. For example, as the working-age population in India is more as compared to the dependent population, it largely contributes to better economic growth as it results in:

• Increased labour force 
• Increased fiscal space
• A rise in women’s workforce
• Increase in the savings rate
• Rise of the aspirational class

Rise in urbanisation 

Since most of the working class is looking for better urban opportunities, it contributes to the rise in industrialisation and urbanisation, ultimately contributing to a country’s economic growth. 

Increased workforce 

With over 65% of the total population being working-class in the country, there has been an enormous increase in the workforce in almost all sectors. 

Effective policy formulation

Formulating and implementing effective policies and schemes in the country by factoring in population dynamics will contribute more significant benefits for people and higher socio-economic impact. 

Steps taken to Optimise Impact in India

The benefits of demographic dividend have been discussed above. We’ve also discussed how India is a country with one of the youngest populations and hence, a more significant demographic dividend. To optimise the benefits of this development, India has taken several measures. They are:

• Increase in the spending on health
• Investing more in the skill development
• Growth in the investments in Research and Development
• Growth in the expenditure on education
• Increase in labour force

 Conclusion 

The demographic dividend is the country’s growth potential which can result from the shift in the population age structure, especially when the percentage of the working-age population, which is 15 years to 64 years, is larger than the non-working population, which ranges from 65 and older, and 14 and younger. 

India is the second most populated country after China, with one of the youngest populations. As the working-age population in India is more as compared to the dependent population, it essentially increases economic growth. With nearly 65% of the total working-class people in the country, India is on the path to becoming an economic superpower.