August , 2018
Can India reap the benefit of its demographic dividend?
14:59 pm

Kishore Kumar Biswas

Sanjeeb Sanyal, Principal Economic Advisor, Ministry of Finance, Government of India attended an interactive session in Kolkata conducted by the Bharat Chamber of Commerce. One of the points of discussion was population explosion in India. This has become more sensitive after the release of the National Register for Citizens (NRC) in Assam. His version was quite balanced. According to him, the population growth of the country is less than one per cent. There are some states where the growth of population is less than the replacement rate. This means if a married couple give birth to two children and they survive, the couple just maintain the replacement rate of population growth. If the couple give birth to one child, the rate of growth of population is less than the replacement rate. This means that when the population growth is zero, the country is just maintaining the replacement rate. There are some states like the southern states, West Bengal and others whose population growth is declining. States like Uttar Pradesh and Bihar are maintaining a population more than the replacement rate.

A comparative status of population in India

India is going to be youngest country in coming one to two years. It is reported that the median age of Indians will be 28 years by 2020. It will touch 37 years in China. The same is true for the USA. But Western Europe and Japan will be much older by that time; the median age will be 45 years in Western Europe and 49 years in Japan. The benefit of having a young population is to be reaped by implementing suitable economic policies. The Chinese have been able to utilise their demographic dividend to achieve tremendous economic growth.

Young population helps economic prosperity?

Ejaz Ghani, a senior economist of the World Bank, pointed out the special place of the young in an emerging economy a few months ago in the national media. First, younger people in a country mean the presence of a more stable labour force. Second, their presence implies opportunity to invest more in human and physical infrastructure. Otherwise there will be more children and expenditure on schools and education would be more. Third, and a bit controversial assumption is that more young women workforce means declining fertility that may enhance the growth aspect of an economy. This may have a negative impact in the long run for an economy. Fourth, it helps more savings in an economy as there is more a working age population. Fifth, such a situation leads to forming a bigger middle-class society. This in turn leads to higher and higher marginal propensity to consume and helps to increase the rate of GDP growth.

How to utilise the demographic dividend?

The first is to have the scope of suitable jobs. Then comes human capital, the most important component of growth alongside technology and finance. In the global aspect, despite automation, human capital has been considered the foremost important component of economic growth. But in India the number of illiterate people is extremely high. There are few centres of globally competitive, high quality education. A few months ago, Saurav Pal, Director, Indian Institute of Science Education & Research (IISER), Kolkata, told this reporter that the country is weak in technological innovation; as “we are mainly consumers of technology”. About three years ago, Professor Indranil Manna, then Director of IIT, Kanpur,  put forth a similar opinion to the reporter and said that India has few of its home-grown technology other than what is necessary to maintain livelihood.

Professor AmartyaSen has been talking about India’s poor public healthcare and education for quite a few decades. Investment in healthcare, education, skill development and the like will enhance human capital for India, which is a precondition to reap the benefit of the demographic dividend. Public service is also a very important factor for economic development and here too, India scores low.  Moreover, the caste system and gender discrimination are also pull factors retarding economic goal. This is why to reap the benefit of the demographic dividend will remain a pipedream unless our policy makers and civil society come together and try to improve the socioeconomic condition to the desired extent to reach the goal. Steps should be taken in this direction, as Sanjeev Sanyal emphasised.


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