India’s Population Explosion: Dividend or Catastrophe?

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From: Neeta Lal

The long-awaited report that India will overtake China as the world’s most populous country in 2023 has sparked a debate in India, with the right-wing ruling government, the Bhartiya Janata Party, predicting a “demographic dividend” and the economists increasingly concerned that runaway population growth will no longer be a cause for concern if there are no sustainable policies in place to harness the dividend.

Currently, an estimated 20-25 million Indians enter the labor market each year, of whom only 7 million find secure employment. More than 15% of young people are unemployed today, of which a good third are not in employment, education or training – the highest rate in the world. Although we still have a young population, they are either unemployable or there are simply not enough jobs for them.

The prediction of India’s population peak, contained in the 27th edition of the United Nations’ World Population Prospects 2022, has been awaited for years as China’s draconian population-limiting policies , followed by intensive urbanization, have greatly reduced its total fertility rate. As a result, Asia’s third-largest economy, now home to 1.4 billion, will become the world’s most populous country next year with a projected total population of 1.5 billion by 2030 and 1.66 billion by 2050, according to the UN.

Trade Minister Piyush Goyal hailed that “the country’s youth” will bring India a huge “demographic dividend”, defined as a period when the share of the working-age population is greater than the share of the non-working age population, with these workers entering the workforce, earning and spending to help the economy grow at a faster rate. Prime Minister Narendra Modi was quick to assert at a virtual event that India’s youth presented a “huge opportunity” for the country.

But according to a recent report by the Confederation of Indian Industry, India’s demographic dividend will become a liability if the economy does not produce enough jobs. India is expected to add another 183 million people to the working age group of 15-64 between 2020 and 2050. The report warns that there is a severe shortage of time and India’s working-age population is needed but not sufficient to sustain economic growth.

The report highlights how skills mismatches and shortages can impact productivity growth. “The demographic dividend is supposed to catapult the Indian economy into the orbit of developed countries,” said Pritha Sen, a professor at the Center for Economic Studies and Planning at Jawaharlal University in New Delhi. “However, the country’s burgeoning population also poses enormous challenges to effectively address the fundamental problems of poverty, hunger, malnutrition, better quality of health, education, as well as physical infrastructure to make cities and towns livable, so unless we invest heavily in education and skills development for young people, we could be heading for a demographic “disaster” rather than a dividend.

India’s demographics have already become a “paradox”, experts say, outweighing any immediate or clear dividend benefits. North and East India are far from replacement fertility levels, while South India is grappling with a new crisis of population aging and West India is reaching quickly the level of the south.

“This has led to the twin crises of too many young people and too many old people being concentrated simultaneously in different geographical areas of the country,” wrote Akhileshwar Sahay, urban transport infrastructure expert for News18. “Different kinds of solutions have to be devised for different parts of India and it is getting late.

India could theoretically have a golden period in the two decades from 2020 to 2040, if the demographic dividend is properly harnessed. However, as experts point out, that doesn’t mean it will happen automatically. With only 3% of the workforce with formal vocational training according to the CII, India cannot hope to increase productivity or hope that young people will have high quality gainful employment. Poor schooling and training, social unrest, growing community divide and growing majoritarianism are just some of the factors affecting the investment climate and job opportunities.

The 2011 census placed 58.3% of the population below the age of 29, falling to 52.9% in 2021 and expected to drop further to 42.9% by 2036. either, the government think tank, Niti Ayog, predicts that India’s gig economy and platform workers will provide substantial employment over the next 10 years, with up to 90 million people being absorbed into the gig economy. The “new age workforce,” he says, will find employment in construction, manufacturing, retail, logistics and transportation.

However, critics point out that this workforce is likely to be underemployed and their jobs would come with low wages, no social security, insurance or medical facilities, and little or no future prospects. The loss of salaried jobs in June 2022 alone, the Indian Economy Monitoring Center said, was around 2.5 million. While daily wage earners have been the most affected, data from the CMIE shows that less than 36% of the working-age population had a job in June 2022. Of the 13 million people who are part of the labor force Indian workforce each year, according to the World Economic Forum, only one in four are management professionals, one in five are engineers and one in 10 graduates are employable.

Experts say that India is often presented as the next big economic growth story after China due to its relatively younger population. However, in the absence of favorable economic, social and political conditions, India risks squandering its advantage by “creating a young and angry population, and with it conditions of social unrest and economic disaster”, the state said. investment bank Espirito Santo. warned in 2013. There are few promises to change that.

Gender disparity is another big challenge. In both urban and rural pockets, cultural barriers and security issues are major bottlenecks for women’s education and professional development. Those who constantly enter the labor market combat bias during recruitment and in the workplace.

UNICEF, in 2019, reported that at least 47% of young Indians will lack the education and skills needed for employment by 2030. While more than 95% of Indian children attend primary school, national family health surveys confirm that poor public education infrastructure and teacher training, as well as malnutrition have ensured poor learning outcomes.

To put it in a global context, the proportion of formally skilled workers as a percentage of the total workforce stands at 24% in China, 52% in the United States, 68% in the United Kingdom and 80% in Japan, against an abysmal 3% in India. .

Given these staggering odds, Sen argues that in addition to government initiatives, business investment in education and employee training will play a critical role in meeting the demand for highly skilled workers.

“It is only with all stakeholders on board, including greater synergy between government and industry, high quality school education, relevant higher education and skills development that India can hope to reap its much-vaunted demographic dividend,” Sen concluded.

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