The Future Is Ours: Why India’s Demography Could Be a Promising Dividend

India has become the world’s most populous nation, as confirmed by the United Nations Population Fund’s (UNFPA) ‘State of the World Population Report 2023’. The report, titled ‘8 Billion Lives, Infinite Possibilities: The Case for Rights and Choice’, estimates the global population to be over 8 billion, with India’s population at 1.4286 billion and China’s at 1.4257 billion. At the time of the report, India had not only surpassed China but had a lead of 2.9 million people.

The debate surrounding whether to celebrate or mourn this distinction has been ongoing for decades. There are concerns about the fallout from uncontrolled population growth, including the potential depletion of resources. However, Prime Minister Narendra Modi’s mantra of “aapda me avsar” (opportunity in disaster) could be applied to turn the demographic dividend to India’s advantage.

The UNFPA report offers several reasons for optimism. The report indicates that 25% of India’s population is in the age group of 0-14 years, 18% in 10-19 years, 26% in 10-24 years, 68% in 15-64 years, and 7% above 65 years old. This makes India the world’s youngest country, with an average age of 28 years. A large young population can provide more energetic human resources, more economic development, and a better quality of life. This is similar to China’s situation three decades ago when its young population averaged 25 years old, taking its first step towards becoming an economic superpower.

The report states that approximately 26% of India’s total population currently falls in the 10-14 age group, equating to around 370 million people in a population of 1.42 billion, roughly equivalent to the population of the United States. These individuals will reach the 20-34 age group in the coming decade, and this fraction of the Indian population alone could generate as much consumer demand as the entire USA.

According to the World Population Prospects-2022, India will remain the world’s largest source of human resources during this period. By 2030, India’s working-age population percentage is estimated to reach its highest level of 68.9%, with the dependency ratio likely to be at its lowest point of 31.2%. The working-age population refers to the group capable of any type of production, while the dependency ratio is part of the population, like children and elderly people, capable only of consumption. About 24.3% of the global workforce will come from India by the next decade, meaning that every fourth working person in the world will be Indian.

A relatively younger population provides India with a competitive advantage in terms of the workforce on a global scale, while their spending habits will also increase domestic demand. These projections showing an increase in the working-age population mean there will be no dearth of labor to keep the economy running for a long time. This will have an obvious boosting impact on investment and production capacity. If this increased workforce is connected to the manufacturing industry, it could lead to a significant improvement in domestic production, bringing India closer to claiming China’s current position as the global manufacturing hub. Availability of the cheapest workforce across all major developing economies will be an added advantage to meeting this objective.

A rising working-age population could also solve another major problem facing the Indian economy. Since it is assumed that working people produce more than they consume, an increase in their proportion would mean tamed inflation for a long period. Availability of cheap labor will also reduce the cost of production, further bringing down the prices of commodities and services.

As per a report published by the Confederation of Indian Industries (CII), optimum use of this demographic advantage can help scale India’s GDP to 9 trillion dollars by 2030 and 40 trillion dollars by 2047 from the current level of 3 trillion dollars.

However, failure to capitalize on India’s demographic advantages could spell trouble for the country on many fronts. We will not only need to ensure enough work opportunities for the young population but also raise their skills to make them more productive. The heartening fact is that the current government has already taken many initiatives in this direction under the guiding vision of PM Modi. India’s success in exporting IT and BPO services, as well as its robust start-up ecosystem, bears testimony to the success of these initiatives.

One such step was the establishment of the Ministry of Skill Development and Entrepreneurship, which provides funding and opportunities for skill development to businesses and entrepreneurs. As part of the efforts to provide skills training programs to millions of youths, the government has launched the PM Skills Development Plan 4.0 and allocated Rs. 2,278.37 crore ($ 27.81 million) for the Skill India Program. The program was launched in 2017, and over one crore people have been trained so far, with 7.4 lakh people benefiting in the third edition alone. According to the government’s Economic Survey, since the program’s inception in the financial year 2017, more than one crore citizens have been trained.

Likewise, the PM Mudra Yojana has helped small traders to start or expand their businesses. The Stand Up India scheme is helping not only women but also SC/ST communities to become financially stable. Such policies have helped the upliftment of marginalized communities while also shoring up foreign investment in the country.
Lack of education among the youth remains another major challenge. The National Sample Survey Office (NSSO) figures claim that only 59.5% of young Indians are literate.

The second challenge is regarding education. According to an NSSO report, only 59.5% of young Indians are literate. Disparities in the quality of education persist between urban and rural areas and different socio-economic environments. However, attention is now being paid to this issue as there are higher education institutions in India than ever before. From 2015 to 2018, 150 new universities and more than 1,570 colleges were established. Since 2014, the way has also been cleared for the approval of 7 new IITs and IIMs in the country. The new education policy has also been prepared to provide modern and quality education to our youth while addressing the needs of the new era.

There is a need to focus on the participation of women in the workforce. Our current participation rate is around 20%, which is lower than half of the global average of approximately 47%. However, last year, almost 49% of the total enrollment in higher education was comprised of female students. With this increasing trend, India is expected to have a larger proportion of women in the workforce in the coming years.

The tag of the country with the largest population would have raised concerns some years ago. But these are different times. With talent, hard work, and new innovations, along with government policies that encourage them, the country has created an ecosystem of inclusive development. The future belongs to us, and if the rising population is a challenge, we have more opportunities than ever before to turn it into an opportunity.