By Nidhi Somani
We are growing! Quite literally in every sense of the word. The economy though has seen a stagnation and de- growth in the last few months has averages an 8% growth rate. Alongside, our population is on the rise. So is the workforce and hence the opportunity to become a world power. We are the only BRIC country which does not have an aging population. We are also set out to become the youngest nation in the near future.
India The 2nd most populous country in the world today, predicted to surpass China by 2026 and become the most populous country in the World. Is the population a boon or bane for a growing economy is a question that often arises.
The Chinese who implemented the one child policy for population control in 1979 have now relaxed the policy. In less than 40 years the Chinese have an aging population where the mean age is on the rise. In this context it is even more a question if population control is the right policy in a country where labour is one of its prime resources.
The median age of India currently is 28 which is much lower than all competing Asian countries and most of Europe. A young workforce, a growing workforce and a more malleable workforce is what India is looking at in the future.
The definition of workforce is the count of individuals between the age of 15 and 64. This is said to become 67% of Indias population by 2020 when it will have almost 1/5th of the worlds workforce. Given such numbers it is important to understand that this proves to be a significant factor in all policy decisions.
Where some countries and also India in the past considered a large population a curse, it is important to note that if we can train and educate our population before they enter the workforce, and provide ample opportunity of employment in various fields of international merit we have with us a goldmine. Also, more the number of people in the workforce lower the dependency ratio which means greater the savings and hence ,the investment in the country.
The dependency ratio which calculates how many people in the country are dependent on each working individual in India is expected to be under 0.5 by 2030 which means that two out of three members in the family will be a part of the workforce. With more and more income to spare in a household both the consumer goods markets and investments will see a rise leading to a rise in the economy as a whole.
“A young workforce means having more innovative minds. It also means we are able to better leverage technology and increase efficiency,” said Ranjan Bandyopadhyay, global HR head of business process outsourcing at Tata Consultancy Services.
The International Monetary Fund said in 2011 that Indias demographic dividend could result in as much as 2% increase in the growth rates of the economy.
However, we need to realise that we need to increase the manufacturing and service industries in the country. India skipped the manufacturing phase of a growing economy and went on straight to providing the world with services. Not substituting technology for labour in areas such as security on ATM booths is under utilisation of the demographic dividend. Unskilled labour should be and can be converted to skilled labour with right efforts and the increased productivity fuels an economy.
“The demographic dividend is not a dividend if people aren’t educated and trained, and if there aren’t enough
jobs for them,” said Prior-Wandesforde of Credit Suisse. What if job opportunities do not rise in the same capacity as the population? We will have scarcity of resources, not enough flow of funds and a rise in poverty and lower living standards.
Education is the key. Indias literacy rates stand at 75 and 51 for men and women in the country. In such a situation even when there is scope for creation of employment opportunities it is limited by the type of job.
Chinas 90% literacy rate has this to the countrys advantage. We need to make grass root level education at par with urban centres.
With large sections of the population joining in on each election as first time voters the population of India is changing the political scenario here in the benefit of the population. With Indias capital having just elected its youngest ever Chief Minister, and giving the fresh ideas of a first time party a chance to bring about a change we must believe there is good to happen. We as a country are not victims anymore. Being the worlds largest democracy there is hope that over the years we will as a country make sure that our numbers are our greatest strength.
I am a graduate from London School of Economics & Political Science with a M.Sc. in Finance and Economics. I am now based out of Kolkata, am an ardent reader and analyst. With a history of various jobs in research and analysis I am now an Entrepreneur. I love to think outside the ordinary and believe there is always more than what meets the eye.