Demographic Dividend, Definition, Significance, Challenges, Schemes
Demographic Dividend refers to the refers to the economic growth potential that can arise from changes in a country's age structure. Learn about Demographic Dividend, its significance, and more here.
Deeksha Dixit20 Nov, 2024
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The demographic dividend refers to the growth in an economy due to shifts in the population's age structure , particularly when the working-age population (15–64 years) outnumbers dependents. Economic Survey 2018-19 highlighted that the demographic dividend in India will peak around 2041.
It provides an opportunity to take advantage of the benefits of demographic dividend. Keep reading to learn about the basics of the demographic dividend, its importance, challenges, and, government measures that can help to take full advantage of the demographic dividend.What is the Demographic Dividend?
The definition of demographic dividend according to the United Nations Population Fund (UNFPA) is “ the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older)". This demographic transition offers countries a window of opportunity to accelerate economic development by ensuring that the workforce is skilled, employed, and productive. For instance, Japan in the mid-20th century is a classic example of capitalising on the demographic dividend to boost industrialisation.Demographic Dividend of India
India is currently experiencing its demographic dividend which started from 2005-06 and will last till 2055-56 . Currently, India is one of the youngest countries in the world with 68% of the population in the age range of 15 and 64 and 26% in the age range of 10-24 age group. This makes the median age of India at 28.4 years. By 2030 , India is projected to have the lowest dependency ratio , meaning fewer non-working people (children and elderly) relative to the working-age population. With this demographic advantage, India could experience accelerated growth and improved living standards.Significance of the Demographic Dividend
The demographic dividend offers many advantages to a developing country like India. The benefits of having a demographic dividend are:- Economic Growth: A large working-age population boosts productivity, leading to higher GDP and improved living standards.
- Labour Supply: More workers drive industrialization, attract investments, and enhance economic output.
- Increased Savings & Investment : A larger workforce can save more, leading to higher capital for infrastructure and development.
- Innovation and Entrepreneurship : Young minds drive technological advancements and entrepreneurial ventures.
- Human Capital Development : Empowered youth contribute to inclusive growth, poverty reduction, and gender equality, enhancing societal progress.
- Global Workforce Contribution: Countries like India can emerge as a global talent hub, exporting skilled labour to ageing economies like Europe and Japan.
Challenges of Demographic Dividend in India
While the demographic dividend offers immense promise, there are some challenges that must be addressed to save it from becoming a demographic disaster:- Regional Disparities : The working-age population is growing in India’s poorer states, where job opportunities are limited. Focused investments in these areas are needed to create employment.
- Skill Gaps: Many future jobs will require advanced skills, but India’s workforce lacks adequate training, limiting economic growth potential.
- Human Development Deficits: With a low ranking in health and education, India must improve these sectors to build a more productive and skilled workforce.
- Informal Economy: A large portion of workers is in the informal sector, where jobs are insecure and productivity is low, restricting the benefits of the demographic shift.
- Jobless Growth: Economic growth risks being jobless due to automation and technological changes, with half of the working-age population currently unemployed (NSSO Periodic Labour Force Survey 2017-18).
- Policy Instability: Policy instability affects crucial sectors like education, healthcare, and employment. Effective governance and long-term policy planning are essential to make the most of the demographic dividend in the coming years.
Schemes By the Indian Government to Utilise Demographic Dividend
The Indian government has launched several initiatives to harness the demographic dividend of India. Some of the initiatives are:- Initiative for Youths: National Youth Policy-2014, Rashtriya Yuva Sashaktikaran Karyakram Scheme, YUVA: Prime Minister’s Scheme For Mentoring Young Authors, etc.
- Education: Sarva Shiksha Abhiyan (SSA), Rashtriya Uchhattar Shiksha Abhiyan (RUSA), Beti Bachao Beti Padhao, National Research Professorship (NRP), Mid Day Meal Scheme, etc.
- Skill Development: Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Udaan, Skill India Mission, Rozgar Mela, Skill India Digital (SID), etc.
- Health : Aayushmaan Bharat Yojana, Mission Indradhanush (MI), Pradhan Mantri Surakshit Matritva Abhiyan (PMSMA), Integrated Disease Surveillance Programme (IDSP), etc.
- Innovation: Stand Up India, Atal Innovation Mission (AIM), Software Technology Park (STP), TIDE 2.0 scheme, Multiplier Grants Scheme, etc.
UPSC CSE PYQs
UPSC Mains 2014 : “While we flaunt India’s demographic 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 . (200 words, 12.5 marks) UPSC Mains 2016: “ Demographic Dividend in India will remain only theoretical unless our manpower becomes more educated, aware, skilled, and creative.” What measures have been taken by the government to enhance the capacity of our population to be more productive and employable ?” (200 words, 12.5 marks) ?si=kZEkNX7doHp2hnyK| UPSC Related Articles | ||
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Demographic Dividend FAQs
What is meant by the demographic dividend?
It refers to the economic growth potential that arises when the working-age population (15–64 years) is larger than the dependent population (under 15 and over 64 years).
What is the age of the demographic dividend?
The age of the demographic dividend refers to the period when the working-age population (ages 15-64) is large relative to dependents.
Which country has the highest demographic dividend?
India currently has a significant demographic dividend, with a large proportion of its population in the working-age group.
What is the average age in India?
The median age in India is 28.4 years, with 68% of the population in the working-age group (15–64 years).
What are the benefits of demographic dividends?
The benefits include economic growth, increased labor supply, higher savings and investment, innovation, human capital development, and a potential global workforce contribution.
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