f&& testbook.com Demographic Dividend-UPSC Notes for the Indian Economy 2022/06/07 According to United Nations Population Fund (UNFPA) demographic dividend is defined as “the economic growth potential that can arise from changes in a population’s age structure, particularly when the working-age population (15 to 64) is bigger than the non-working-age population (14 and younger, and 65 and older). When the working-age population (15~64 years) outnumbers the non-working age group, there is the potential for economic gains. When the proportion of working people in the total population is large, the demographic dividend arises because more people have the capacity to be productive and contribute to economic growth. In the context of India, this article discusses the demographic dividend and the opportunities that come with it, which is one of the most important topics for UPSC IAS EXaminations. What is a Demographic Dividend? Itis a concept in which a country with low birth rates and low mortality rates earns an economic dividend or the benefit of increased working population productivity. Because of low birth rates, the working-age population outnumbers the young dependent population, resulting in fewer individuals to support and more people in the workforce. This allows economic resources to be utilised in other sectors, accelerating a country’s economie growth and raising the population’s standard of life. ‘Study Population in India in detail! Demographic Dividend in India India now has a big share ofits population that is under the age of go. Around 30% of India’s population is between the ages of o and 14, The elderly in the 60+ age range still make up a modest percentage of the population (8%) in the country. India has 62.5 percent of its population in the 15-59 age range, which is steadily expanding and will peak around 2036 when over 65 percent. These demographic factors imply that India has a demographic dividend, which began in 2005-06 and will last through 2055-56. According to the Economie Survey 2018-19, India’s Demographie Dividend will peak around 2041, when the population of working age (those aged 20 to 59 years) will reach 59 percent. Currently, India has a large proportion of the population that is young. About 30% of India’s population is in the age group of 0-14 years.The elderly in the 60-plus age group is still a small proportion (8%) of the country’s population. Opportunities related to the demographic dividend in India Economie growth: Increasing domestic demand as a result of rising GDP per capita and falling dependency ratios creates another opportunity. As a result, demand-driven economic growth occurs. Young demographies is the souree and result of growth, education, improved economic security, and a need for more durable goods. Infrastructure: The government may redirect resources from spending on children to investing in physical and human infrastructure thanks to the increased fiscal space offered by the demographic dividend. ‘The increased labour supply is the first benefit of the young population, as more people enter working age. However, the size of this advantage is contingent on the economy's ability to absorb and productively employ the additional employees. Formation of Capital: Individuals save more money as their number of dependents reduces. This increase in national savings rates expands the pool of capital in developing countries and gives a chance for tors to produce capital, Female Human Capital: Lower fertility rates lead to healthier women and less domestic economic stress. This provides a chance to increase the number of women in the workforce while also improving human capital Migration: It presents various opportunities that can occur as a result of demographic shifts, including the demographie dividend and interstate migration to alleviate labour shortages in some areas. Most areas of the Indian economy would benefit from a higher trained workforce than exists now. Providing India’s workers with the necessary skill sets and knowledge to enable them to contribute significantly to the country’s economic progress would be both a problem and an opportunit Study Census 2011 here! Advantages of Demographic Dividend Increased economic growth as a result of the higher working-age population’s increased economic activities and reduced spending on the dependent population. Increased labour force productivity boosts the economy In the future decades, India’s whole workforce will be able to supply more than half of Asia's prospective workforce. Increased fiscal freedom due to the demographic dividend allows resources intended for children and the elderly to be diverted to human capital and infrastrueture, Increased employment of women due to lower fertility rates provides for inereased economic growth. Historically, the demographie dividend has contributed roughly 15% of overall growth in industrialised economies. Rapid industrialization and urbanisation as a result of an increase in the number of job seekers. This would push the country to increase its economic activity.When population dynamics are factored into the planning and implementation of schemes and programs, the socio-economic effect and benefits to individuals are likely to be greater. Study UN Concepts of Human Development here! Challenges associated with the demographic dividend in India Asymmetric demography: The increase in the working-age population is projected to be concentrated in some of India’s poorest states, and the demographic dividend will only be fully realised if India ean establish gainful employment opportunities for these people. The problem of a skewed gender ratio: Female labour force participation rates in India have declined from 34.8 percent in 1990 to 27 percent in 2013, according to data from the International Labour Organisation and the World Bank. India cannot hope to capture the demographic dividend without the engagement of women. Informal sector: Another barrier to realising the benefits of India’s demographic transition is the country’s informal economy. Nearly 216 million people work in agriculture, mostly in the informal economy, where they not only earn lower salaries but also have limited social protection and only a few days of work per year. Because of deindustrialization, deglobalization, the fourth industrial revolution, and technological innovation, there is growing concern that future growth will be jobless. According to the NSSO Periodic Labour Force Survey 2017-18, India’s labour force participation rate for the age range 15-59 years is roughly 53%, meaning nearly half of the working-age population is unemployed. Improving human capital: India’s graduates and postgraduates have low employability due to poor human capital generation. According to ASSOCHAM, barely 20-30% of engineers find work that matehes their abilities. As a result, a lack of human capital and skills isa significant concern. India ranks goth out of 189 nations on the UNDP's Human Development Index, which is concerning. India's life expectaney at birth (68 years) is significantly lower than that of other emerging countries. The average number of years spent in school and the projected number of years spent in school both need to be increased. Attempt questions on Demography here! Reformative Measures Job Creation: To absorb the influx of young people into the workforce, the country needs to produce ten million jobs per year. Promoting corporate interests and entrepreneurship would aid in job development, allowing the enormous labour force to find work. The improvement in India’s rating in the World Bank’s Ease of Doing Business Index is encouraging. If correetly executed, programmes like Start-up India and Make in India will yield the expected results in the near future.Urbanisation: In the coming years, a major portion of the youthful and working population will migrate to urban regions within their own and other states, resulting in a rapid and widespread expansion of the urban population. ‘Theifocus of urban policy planning should be on how these moving individuals can obtain basie utilities, health, and social services in urban settings. ‘Smart City Mission and AMRUT, for example, must be executed suecessfully and cautiously. Investing in Human Capital through healtheare, excellent education, jobs, and skills helps to generate human capital, which is essential for supporting economic growth, reducing extreme poverty, and fostering a more inclusive society. Increase the employability of the young population through skill development. India’s workforce must be equipped with the necessary skills to compete in the modern economy. The National Skill Development Corporation (NSDC) was founded by the government with the goal of skilling or upskilling 500 million individuals in India by 2022. Education: Investing appropriately in primary, secondary, and higher education to improve educational levels, India, which has about 41% of its population under the age of 20, can only benefit from the demographic dividend if it improves its education system. Academic-industry collaboration is also required to align modern industry demands with academic learning levels. The creation of the Higher Education Finance Agency (HEFA) is a step in the right direction. Health: Improving healtheare facilities would allow young workers to work for longer periods of time, enhancing the economy's production. Itis critical that Ayushman Bharat and the National Health Protection Scheme (NHPS) succeed. With the effective execution of the Integrated Child Development (ICDS) programme, the nutrition status of, women and children also requires special attention. Good governance enables fair opportunity for all by providing effective channels for eitizen participation, well-functioning institutions, respect for the rule of lav, low levels of corruption, respect for property rights, the sanctity of contracts, and so forth. Reforming Labour Laws: To fully utilise India’s demographic dividend, complex labour and land laws must be formatted, as well as supporting initiatives to promote the growth of currently struggling sectors. Recent Demographic Trends in India India has the youngest age group population in India. India’s median age will be 28 years in 2022, compared to 37 in China and the United States, 45 in Western Europe, and 49 in Japan.Currently, India’s working-age population is growing due to dramatically dropping birth rates, with our average annual population growth rates practically halving in the recent decade compared to the 1970s. ‘The gradual fall in India’s total fertility rate (TFR), which is the number of births per woman or children projected to be born to a woman of reproductive age, has been the main driver of this trend. India, interestingly, has a TFR of 2.2, which is a little lower than the global TER of 2.4. Although the total fertiit with higher TFRs of up to 2.5 in states like Bihar, Madhya Pradesh, and Uttar Pradesh, and lower TERs of 1.5 in states like Delhi, Maharashtra, and Tamil Nadu, rate has decreased by half since 1990, there is significant interstate variance, A Minister in the Indian government has stated that India’s demographic dividend has the ability to establish an Atmanirbhar Bharat. Bihar’s poverty rate remains consistently high when compared to national figures. Surprisingly, more than half of Bihar’s population is classified as “multidimensionally poor” according to the 2018 global multidimensional poverty index. The much-touted demographic dividend can only be realised if the youth population is healthy and educated. Way forward If policymakers connect developmental policies with this demographic shift, India will be on the right side of a demographic transition that will present a wonderful chance for rapid socio-economie development. To benefit from the demographic dividend, sufficient human capital investment is required, with an emphasis on education, skill development, and healtheare facilities. This demographic shift also carries with it numerous obstacles. We would be facing a demographic crisis if the enlarged workforce was not appropriately skilled, educated, and provided with gainful jobs. We can benefit from the demographic dividend by learning from global ideas from countries like Japan and Korea and devising solutions that take into account indigenous challenges. We hope all your doubts regarding the Demographic dividend are addressed after going through this article. Testbook provides comprehensive notes for different competitive examinations. It has always assured the quality of its product like content pages, live tests, Gk and current affairs, mocks and so on.Ace your UPSC preparation with the Testbook App! UPSC Prelims Previous Year question To obtain full benefits of the demographic dividend, what should India do? (UPSC 2013) (a) Promoting skill development (b) Introducing more social security schemes (©) Reducing infant mortality rate (d) Privatisation of higher educationUPSC Mains Previous Year Question While we found India’s demographie dividend, we ignore the dropping rates of employability. What are we missing while doing so? Where will the jobs that India desperately needs come from? Explain. (UPSC 2014) FAQs regarding Demographic Dividend Qu What is a Demographic Dividend? Ans.1 It is a concept in which a country with low birth rates and low mortality rates earns an economic dividend or the benefit of increased working population productivity Q.2 What are the causes of Demographic Dividend? Ans.2 The causes of Demographic Dividend are as follows ‘The birth rate is decreasing. ‘The fertility rate is lower. Prolonged life expectaney Q.3 Who coined the term Demographic Dividend? Ans.3 David Bloom coined the term Demographic Dividend, He stressed the role of demography in economic development. From 1965 to 1990, David Bloom ascribed a substantial percentage of East Asia's economie growth to the region’s working-age population, which led to increased productivi Q.4 Which country is in Stage 4 of Demographic Transition? Ans.4 Australia, Argentina, Singapore, the United States, South Korea, and the majority of European countries are in Stage 4 of the Demographie Transition, Stage 4 of Demographic Transition is seen as best for a country because it demonstrates moderate population expansion. Q5 What are the economic growth opportunities related to the demographic dividend in India? Ans.5 Increasing domestic demand as a result of rising GDP per capita and falling dependency ratios creates another opportunity. As a result, demand-driven economic growth oceurs. 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