October , 2019
International migration undercuts India's demographic dividend
13:48 pm

Rajiv Khosla

Data released by the Population Division of the UN Department of Economic and Social Affairs on September 18 highlighted that international migrants comprise 3.5% of the global population vis-à-vis 2.8% in 2000. With a migrant population of 17.5 million, India has topped in terms of international migrants in 2019.

The number of international migrants from India - between 2015 and 2019 - has seen a surge of nearly 1.6 million. Besides India, other countries from where large international migration takes place are Mexico (11.8 million), China (10.7 million), Russia (10.5 million), Syria (8.2 million) and Bangladesh (7.8 million). Major destinations of outbound Indians are the UAE (3.41 million), the USA (2.66 million), Saudi Arabia (2.44 million), Europe (1.48 million), and Oman (1.32 million). Interestingly, the destinations for Indians (except Oman) remained the same compared to what it used to be three decades ago. The report categorically states that 74% of the global migrants are between the ages of 20 and 64 years.

Exodus of working age population is not considered to be a good sign for any economy. The population below the age group of 15 years (this age is the cut-off used for global comparisons by the International Labour Organisation) and more than 65 years is generally considered as the dependent portion of the population. High dependency ratio means that dependents are more than the working population, which virtually lowers the savings and investment ability of the working population.

The availability of demographic dividend in India, which started in 2005-06, is projected to last till 2055-56. After that, we shall again be facing a higher dependency ratio. The benefits of demographic dividend which we are reaping today are the outcomes of an improvement in medical science (thereby decreasing the infant mortality rate), reduction in malnourished children and due to the success of population control measures adopted and practiced in 1980s and 1990s. But the size of the migrant population at 17.5 million (almost equal to the population of Sweden and Switzerland) is robbing us of many of the benefits of this demographic dividend.

Solution to this problem calls for understanding the root cause of the problem. Apparently, lesser chances of employment in our country have emerged as the leading reason forcing the exodus of residents. A report by NSSO for 2017-18 has shown that un-employment rate has increased to over 6%. The same report also cites that the number of persons employed has fallen down by nearly two crore in the five years ending 2017-18. In the previous year or so, the automobile sector alone has laid off nearly 350000 workers. In addition to it, there are many other companies like Uber, Zomato, Shopclues, Foodpanda, Cleartrip, HSBC Bank, and some pioneering media houses, which are downsizing. The experts rue that low or poor skill-sets has rendered a sizeable portion of the Indian population unfit for the technology-oriented job market. Estimates state that there are already ten crore people in the age group of 21-35 years with bad skills who are unsuitable for jobs and another such 10 crore unemployed persons will get added by 2025, thereby taking the total unemployed to 20 crore.

Hence, to circumvent the pitiable state of affairs, young boys and girls from prosperous families are inclined towards permanent migration and settlement in other countries. The initiation to it takes place through admissions in educational institutions in the countries of their choice. It not only dashes India’s demographic hopes but harms the economy as well.

In the year 2017-18 alone, $2776 million have been spent by Indian parents abroad for the education of their children. This sum of money could have been invested productively to mobilise the GDP growth within the country, had the policymakers anticipated this situation earlier as was done by China, South Korea, and Japan. China, during its low dependency periods (starting in 1985), managed to grow at 9.16% whereas Singapore (in 1979) and South Korea (in 1987) in the similar 10 years period grew mostly at double digits thereby restricting the extent of unemployment to the minimum. Before this demographic dividend turn into a demographic disaster, the Indian government needs to take appropriate steps to revive the economy. Some of the alternatives are offered below.

At the outset, the government needs to stop contemplating about the conservative fiscal deficit and spend thriftily on imparting skill education, keeping in mind the skill requirements of the corporate world. This skill upgradation should be necessarily done over and above the school and college curriculum. It will help in increasing employment potential and will also help the economy to retain the working population.   

Secondly, public investment is strongly required in developing infrastructural facilities like dams, roads, power projects etc. There has been a complete choking of private investment in the infrastructure sector owing to restrictive lending policies of banks because of high NPAs. Though the government is attempting for revival from the supply side by decreasing the rate of interest or smoothening the conditions for the corporates to kick start growth, yet, it would be better if the government tries and offer demand side incentives directly to the people. Public investment has got the crowding in as fiscal efforts can actually ignite the growth cycle.

Third, massive investment is required to be made in the agro industry as well, since we are not adding value to the available produce. This investment will not only help to run the agro and food processing industries, thereby generating employment in the country but will also help producers by giving them fair prices for their products.

Last but not the least, the government must categorise manufacturing industries (which have a lot of potential to
provide jobs) into capital intensive and labour intensive categories. Industries using capital intensive or artificial intelligence and automated techniques should be charged additional cess and surcharge. The amount so collected should be used to incentivise the units which use labour oriented techniques. Simultaneously, high import duties should also be charged on high value imported goods.

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