We will take a look at the demographic dividend and the Indian economy and try to answer questions are

we able to reap the benefits of demographic dividend if not what is the reason for same and if yes in which
sector and are they visible.

Firstly we will for the age dependency ratio. The dependency ratio is the ratio of the population of age
group below 15 years and above 64 age group to the age group of the 15-64 population. Current dependency
ratio of our country 52.2 in year 2015. In year 1970 it was 79.2. As the dependency ratio has decreased
what it means for India. There are several advantages of having low dependency ratio first one is the
increasing tax base. As the people who are dependent on the working age population reduces you have
wider tax base which helps government in collecting more revenue. The second advantage is that
government has to spend less money on health and child domain. As the most population is young
government can reduce its expenditure on child and health.

Age dependency ratio India

80
60
40
20
0
1990 2000 2009 2010 2011 2012 2013 2014 2015 2016 2017

Second we will look towards the female labor force participation rate. Many economists noted that as the
working population increases the female labor force participation will increase, but same did not happened
in India. Our female labor force participation rate is currently at 28.2 also our fertility rate has been reduced
to 2.2 so with decrease in fertility rate our labor force participation also reduced. The reasons can be with
the stable income and prime worker of family earning well these can be one among many reasons behind
this fall. Also the social causes can also be behind this.

Female labor force participation and Fertility rate

50
40
30
20
10
0

India Labor force participation rate, female (% of female population ages 15-64) (modeled ILO
estimate)
India Fertility rate, total (births per woman)
Now talking about the youth participation rate this rate is also on decline as the most of the youth are
unemployed and majorly female are getting hard to find jobs. The male percentage is slightly better than
female because male youth are spending more time on studying that is they are taking higher education
whereas rate of taking higher education is lower in female.

Youth Participation Comparison

100

50

0
1990 2000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Labor force participation rate for ages 15-24, total (%) (modeled ILO estimate)
India
Labor force participation rate for ages 15-24, male (%) (modeled ILO estimate)
India
Labor force participation rate for ages 15-24, female (%) (modeled ILO estimate)
India

The consumption expenditure by the Indian households also doesn’t hold true with the decline in the labor
force participation rate. Our household consumption is consistently increasing in exponential way whereas
labor force participation rate is unable to give suitable reason for increase in household consumption. The
reason can be rise in inequality where rich are spending more while poor are becoming more and the
consumption expenditure by the rich taking our country household consumption to new heights.

Household consumption and labor force participation rate

120
100
80
60
40
20
0
1985 1990 1995 2000 2005 2010 2015 2020

Labor force participation rate, total (% of total population ages 15-64) (modeled ILO
estimate) India
Households and NPISHs Final consumption expenditure (current LCU) India
The import and export statistics of our country are also unable to do justice to the decrease in the labor force
participation rate. As our export are increasing and at same time our imports are also increasing. The reason
behind rise in export without rise in labor force participation rate can be increased in the productivity of
Indian workers or the increase in automation in Indian industries.

Exports and Imports and Labor Force participation rate

80

60

40

20

0
1990 2000 2009 2010 2011 2012 2013 2014 2015 2016 2017

Exports of goods, services and primary income (BoP, current US$) India
Imports of goods and services (BoP, current US$) India
labor force particpation

India’s gross domestic saving rate as percent of GDP is 27%. As from the circular flow of economy we
know that savings get transferred into the investments and this investments can be used to increase the
income of country. As the savings will increase the banks will have more money to lend and thus helping
domestic investors to borrow money at lower rate. As Keynes though of paradox of thrift which is unlikely
to happen. The Problem in India is our country do have the saving habit but we don’t save in banks, on this
aspect our country needs to focus more.

India Gross domestic savings (% of GDP)

40
30
20
10
0
198919911993199519971999200120032005200720092011201320152017