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India’s demographic dividend: A double-edged sword

India’s demographic dividend: A double-edged sword

By Ananya Singh

India has long been synonymous with a burgeoning population. A recent Bloomberg analysis revealed how young this overflowing population truly is. With half of the population under 25 years and two-thirds under 35, India has a larger millennial population than China or the US. China has contained its population growth through stringent family planning and has maximised its economic progress. Now, it is time for India to gain from the unprecedented youth boom.

India may have the largest labour force in the world by 2027. The number of people of working age (between 15-64) continues to rise, with another 1 billion expected to be added soon. However, the lack of skills and adequate education coupled with the dire deficiency of jobs may not allow India to capitalise on this advantageous situation.

Today, India hangs between rapid economic growth and anarchic chaos. Which way will the pendulum swing?

Deciphering India’s demographic dividend

India’s birth rate has declined over the years. Still, a growth rate of 1.6% per year was recorded in the 2001-11 Census. According to the United Nations Population Division (UNPD), India will overtake China to become the most populous country by 2020. The population boom is expected to continue till 2050.

The demographic transition in the country is erratic. India’s overall fertility rate is recorded at 2.6 births per woman. However, inconsistencies are revealed upon a closer look. Urban India has a fertility rate of 1.8, which is lower than the stipulated ‘replacement rate’ to maintain a constant population. Therefore, the population boom is due to the underdeveloped rural areas of the North. Uttar Pradesh records a fertility rate of 3 while Bihar surpasses it with an average of 3.3.

These areas lack quality developmental infrastructure and have poor educational facilities. As such, the youth coming of age are illiterate and unskilled.

The skewed gender ratio in these regions produces a surplus of males, which creates an imbalance in the demographic pattern. Though India has a large youth population that can propel its economic growth to competitive figures, the distorted demographic pattern may cause a crisis.

Challenges posed by population boom

The government has a large youth population on its hands. As delineated in a paper titled India’s Demographic Change: Opportunities and Challenges by K.S. James, there are three major concerns. First is the issue of the conspicuous link between demographic change and economic growth. James emphasises the importance of a satisfactory implementation of policies and reforms for youth development are essential.

Second is the issue of “education deficits“. The illiteracy rate in the country is disastrously high. Bihar recorded the lowest overall literacy rate of 63.82% in the 2011 Census. The education system is in a critical condition due to poor infrastructure, high absenteeism among teachers and students, dismal implementation of education policies and on-ground regulation. The mournful educational framework makes youth development a burdensome task.

Third, there is rampant unemployment that is set to increase in coming years. Successive governments have struggled with the agenda of creating jobs. Many initiatives have bloomed and subsequently crumbled to dust in the face of economic instability.

Without jobs, how can the millennial generation change the country’s future?

A bleak future with no jobs

An analysis of India’s labour situation reveals a web of complex labour laws. Professors Timothy Besley and Robin Burgess found that rigid labour laws lead to a sharp fall in employment and productivity.

The inflexible labour regulations have rendered manufacturing share in GDP stagnant—between 14-18%.  Further, labour is now competing with robots due to automation. As such, excessive focus on manufacturing is futile as manual labour is fast being replaced.

Addressing Delhi Economics Conclave’s inaugural session, Singapore’s Deputy PM Tharman Shanmugaratnam said, “India’s biggest challenge is jobs. The country has lost a lot of time because you have legislation that is really anti-employment, an education system that has not prepared people for the needs of the modern economy – (both at the school and tertiary levels) – and it’s now a race against technology, which we all face”.

Labour participation also witnesses a gross gender imbalance. Joining the workforce to supplement their family income, women often leave jobs due to household responsibilities. According to ILO, women are willing to work if jobs are closer to home. The government must encourage women in the labour force to instil equality.

Current scenario: Reforms for youth development

PM Modi’s ‘Make in India‘ initiative aimed at revitalising the manufacturing sector by creating employment. However, the result shows a mere growth of 1.6% over five years till 2015-16. Strict land and labour regulations do not allow India to attract foreign investors in manufacturing. Further, ‘Make In India‘ ignored lucrative industries like textile, footwear and leather. These received no funding.

India’s highest GDP contributor remains the service sector. However, the unskilled and poorly educated labour emerging from the underdeveloped regions are unable to secure jobs in service. Hence, the Centre turned its attention to skill development with the ‘Skill India Mission‘. Begun with a corpus of Rs 1500 crores, the government claimed outstanding results of having trained 2 million individuals. 

A probe, however, revealed that the centres lacked the quality infrastructure for training. Aadhaar numbers are mandatory for admission, but numbers of around 5,70,000 students allegedly trained by the centres remain unverified. “If 5.71 lakh candidates’ Aadhaar details are not available, it means training providers either enrolled non-existent candidates or multiple enrollments of one candidate to falsely escalate total figure”, said Raj Pal Arora, a former associate of Construction Skills Development Council (CSDS).

Another scheme introduced by the Centre to generate employment opportunities was the MGNREGA. The Act provides 100 days of employment to every adult willing to engage in manual labour in rural areas.

Where are the jobs?

The Economic Survey 2015-16 revealed a rise in the unemployment rate from 3.8% in 2011-12 to 5%. It further shows a shift in jobs from a permanent to a contractual, temporary arrangement. A high number of the labour force is engaged in the informal sector with a lack of regular pay. The 2016 Labour Bureau survey revealed 80% of the labour force to be self-employed or contractually engaged. The ‘self-employment’ rate is also higher among people who hold educational degrees and are better qualified on paper.

The Centre’s reform initiatives have fizzled out, with no significant increase in skill acquisition and training. The overwhelming unemployment is hampering economic progress and will continue to do so unless more streamlined job creation ventures show satisfactory results.

Pros of a digital environment

An advantage that the millennials hold over previous generations is the digital environment they grew up in. The penetration of smartphone technology and rapid adoption of digital payments shows India’s amenability to upgradations. This will enable the youth to create opportunities for themselves through skill and knowledge acquisition. They are better equipped to handle the digital revolution.

If the Centre fails to create jobs for this generation, they may well come up with their own digital solutions. The bottomless well of information, better known as the Internet, could fuel jobless youth to ideate, innovate and execute.

However, this again holds true only if there is adequate digital infrastructure available. Rural areas lack basic connectivity. The low standards of education and equipment in these regions restricts access to the digital sphere.

Demographic dividend or disaster?

India’s future is a ticking time bomb. The generation meant to change India lies disconnected, illiterate, unskilled and with barely enough to sustain themselves and their family. India must make provisions for them to be able to contribute to the economic prosperity of the nation.

As K.S. James suggests, the current policy environment with outdated reforms must be improved. A rehaul of the education system in underdeveloped regions is vital. Job creation should be the Centre’s priority. Moreover, the government must not ignore employment opportunities for females.

‘A large labour force with nowhere to go’ could be India in the very near future. Unemployment will create frustration and the government must not undermine the revolutionary spirit of frustrated youth. India, with the youngest population in history, has immense potential for growth. Wasting this advantage will be an irreversible error that can hurl the country into destitution.

Featured Image Source: Flickr

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