India’s GDP can grow from the current $3 trillion to $9 trillion and $40 trillion by 2030 and 2047, respectively, if its working age population is productively employed, a new Confederation of Indian Industry (CII) report has said.

The golden period of 30 years between 2020-50 is when the country’s working age population — its so called demographic dividend — will bulge and it can be an important enabler to boost growth, even as the developed world including China ages, said the report titled ‘Harnessing India’s Demographic Dividend for Boosting Growth’.

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Though the GDP target of $40 trillion by 2047 — the 100th year after independence — may be ambitious, this is doable with a concerted effort by all stakeholders and the right intervention, the report said. India can create jobs on the scale required on a sustained basis only with changes in policy frameworks for education and workforce management, it added.

Bias in job markets

The CII report highlighted that the job market is biased towards high skill labour and therefore, the creation of jobs for low skill labour, who would continue to dominate its workforce, will challenge India. Over the years, India has experienced rising literacy rates but low levels of vocational training/skilling, which gets reflected in the high unemployment rate among the educated.

Closing the skill gaps of the qualified workforce will be critical, as India depends more on human capital than its peer countries that have a similar level of economic development, the report noted. Skilling and reskilling require a coordinated response from government, industry, academia even as Covid-19 continues to cause structural changes to the workplace.

The CII report has made a case for treating manufacturing and services as the growth engines going forward. It has noted that undesirable reverse structural transformation is taking place with excess employment in agriculture, even as its share in gross value added (GVA) remains low and stagnant.

In 2020, there were about 900 million people (67 per cent of the total population) in the working age group of 15-64 years, which is expected to expand by another 100 million by 2030, despite a declining trend in fertility rate. This implies that a whopping 24.3 per cent of the incremental global workforce over the next decade will come from India.

Increase focus on labour-intensive sector

The CII report has called for an increased focus on labour-intensive industries such as textiles, leather, gems and jewellery, food products, etc. In fact, the push to these sectors will also help the country generate higher export revenues.

Given that 95 per cent of the MSMEs are micro and cottage, creating a new category for “cottage industry” with an annual turnover of less than ₹1 crore and giving 50 per cent of the PSU government orders to such firms should help in creating gainful employment.

This will also complement GST in achieving greater formalisation and reducing the “duality” of Indian manufacturing, the report said. It has also called for a medium to long-term roadmap for becoming an innovation-oriented society and finally a leader in science and technology.

Raising R&D expenditure from 0.7 per cent to atleast 2 per cent should be a good starting point, it added. This will be essential as world moves towards automation and artificial intelligence in the post-Covid-19 world, according to the CII report.

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