Harnessing the dividend

Today’s children are tomorrow’s parents. This being so, a key pointer to a stable, if not declining, population is the number of young children. The recently released Census data on age distribution of the population indicates that India is on the threshold of an important transition. Between 2001 and 2011, the country’s overall population grew from 102.86 to 121.06 crore, or by 17.7 per cent. But the increase in those of the 0-9 age group amounted to just 0.4 per cent. Many States have actually seen the number of children register an absolute decline over that in the previous Census of 2001. A phenomenon that was first reported in the 1991 Census for Kerala and Tamil Nadu has now spread to almost every major State, barring Bihar.

While diminished numbers of toddlers and children is good news, no less heartening is that it has been accompanied by an almost 25 per cent spike in the ‘working age’ category of 15 to 59 years – which accounts for over 60 per cent of India’s population today. Since this group is in a position to earn, while simultaneously now having to support a smaller proportion of dependents, it increases the potential for higher savings in the economy. This is the classic ‘demographic dividend’ that China successfully reaped in the last few decades, but is poised to turn unfavourable with declining fertility and increasing longevity. That is a problem familiar in the western world – an ageing population. In contrast, India is just hitting the demographic sweet spot of having fewer children and a rising number of those in the working-age group.

To fully harness this demographic dividend, the economy must, however, grow quickly. So must employment opportunities – a larger workforce is unproductive in the absence of jobs for it. In the last decade, GDP growth averaged 8 per cent annually, there was rising urbanisation, and fresh jobs were created outside of agriculture and traditional industries. The demographic dividend seemed like a wide window of opportunity, reinforcing India’s image as a young, resurgent and aspirational nation. Today, we are faced with an economy battling a growth and investment slowdown, one that could neutralise the benefits of a young workforce and fewer children to support. The need of the hour is clear: Get growth back on the rails and generate jobs. Supplement this with investments in infrastructure and human capital to ensure that those entering the workforce are more productive and employable. This means focusing on the quality of education; merely opening more schools will no longer work given there will be fewer and fewer children to enroll in them.

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