The Demographic Dividend is defined as "an increase in economic output that occurs when the number of persons in the workforce grows faster than the number of dependents." "A country with both increasing young people and reducing fertility has the potential to enjoy a demographic dividend," according to UNFPA. This article will explain to you about Demographic Dividend which will be helpful in preparing Geography for the UPSC Civil service exam.

What exactly is a Demographic Dividend?

• The demographic dividend, according to the United Nations Population Fund (UNFPA), is the economic growth potential resulting from a changing population age structure, with a large proportion of people in the working-age group of 15 to 64 years as opposed to the non-working-age population of below 14 years and above 65 years.
• When the proportion of working people in the total population is high, a demographic dividend occurs, indicating that more people have the potential to be productive and contribute to economic growth.
• Many argue that there is great potential for economic gains due to the "demographic gift," which is a dividend between young and old.
• To achieve economic growth, the younger population must have access to high-quality education, adequate nutrition, and good health, including sexual and reproductive health.
• When a country transitions from a rural agrarian economy with high fertility rates to an urban industrialised economy with low fertility and mortality rates, it experiences a demographic dividend.

Demographic Dividend in India

• In an ageing world, India has one of the youngest populations.
• India's median age will be just 28 by 2020, compared to 37 in China and the United States, 45 in Western Europe, and 49 in Japan.
• Since 2018, India's working-age population (people aged 15 to 64) has grown faster than the dependent population (children under the age of 14 and people over the age of 65).
• This increase in the working-age population will last until 2055, or 37 years from now.
• This transition occurs primarily as a result of a decrease in the total fertility rate (TFR, which is the number of births per woman) following the stabilisation of life expectancy.
• Two interesting facts emerge from a UN Population Fund (UNFPA) study on India's demographic dividend.

• India has a five-decade window of demographic dividend opportunity, from 2005-06 to 2055-56, which is longer than any other country on the planet.
• Because of the different behaviour of the population parameters, this demographic dividend window is available at different times in different states.

Advantages of Being a Demographic Dividend

• Increased economic activity as a result of a higher working-age population and a lower dependent population leads to better economic growth.
• Increased labour force, which boosts the economy's productivity.
• The demographic dividend has created more fiscal space, allowing resources to be diverted from spending on children to investments in physical and human infrastructure.
• Increase in women's workforce, which occurs naturally as fertility declines and can be a new source of growth.
• An increase in the savings rate, because working age is also the best time to save.
• The rise of the aspirational class, or a massive shift towards a middle-class society.
• In advanced economies, the demographic dividend has historically contributed up to 15% of overall growth.
• Because of the changing population structure, Japan was one of the first major economies to experience rapid growth.
• From 1964 to 2004, the country experienced a demographic dividend.
• Rapid industrialisation and urbanisation as a result of an increase in the number of people looking for work, which would necessitate increased economic activity.
• The rise in the workforce: With more than 65 per cent of the population of working age, India will become an economic superpower in the coming decades, supplying more than half of Asia's potential workforce.
• When population dynamics are factored into the planning and implementation of schemes and programmes, the socio-economic impact and benefits to people are likely to be greater.

Challenges Associated

• Asymmetric demography: The increase in the working-age population is likely to be concentrated in some of India's poorest states, and the demographic dividend will only be fully realised if India can create gainful employment opportunities for this population.
• Lack of skills: The majority of new jobs created in the future will be highly skilled, and the Indian workforce's lack of skill is a major challenge.
• Due to a low human capital base and a lack of skills, India may not be able to take advantage of the opportunities.
• Low human development indicators: According to the UNDP's Human Development Index, India ranks 130th out of 189 countries, which is concerning.
• Informal nature of India's economy: The informal nature of India's economy is another impediment to reaping the benefits of demographic transition.
• Jobless Growth: Due to de-industrialization, de-globalization, the fourth industrial revolution, and technological progress, there is growing concern that future growth will be jobless.
• According to the NSSO Periodic Labour Force Survey 2017-18, India's labour force participation rate for the age group 15-59 years is around 53%, meaning nearly half of the working-age population is unemployed.

Recommended Actions

• Building Human Capital: Investing in people through healthcare, quality education, jobs, and skills helps to build human capital, which is essential for supporting economic growth, ending extreme poverty, and fostering a more inclusive society.
• Skill Development: Increasing the employability of the young population through skill development.
• India's workforce must be equipped with the necessary skills to compete in the modern economy.
• The National Skill Development Corporation (NSDC) was established by the government with the goal of skilling or upskilling 500 million people in India by 2022.
• Education: Improving educational levels by investing wisely in primary, secondary, and post-secondary education.
• India, which has nearly 41% of its population under the age of 20, can only benefit from the demographic dividend if it improves its education system.
• Academic-industry collaboration is also required to align modern industry demands with academic learning levels.
• The creation of the Higher Education Finance Agency (HEFA) is a step in the right direction.
• Health: Improving healthcare infrastructure would result in a higher number of productive days for the young labour force, boosting the economy's productivity.
• It is critical that Ayushman Bharat and the National Health Protection Scheme (NHPS) succeed.
• With the effective implementation of the Integrated Child Development (ICDS) programme, the nutrition level of women and children also requires special attention.
• Job Creation: To absorb the influx of young people into the workforce, the country needs to create ten million jobs per year.
• Promoting business interests and entrepreneurship would aid in job creation, allowing the large labour force to find work.
• The improvement in India's ranking in the World Bank's Ease of Doing Business Index is encouraging.
• If properly implemented, programmes like Start-up India and Make in India will yield the desired results in the near future.
• Urbanisation: In the coming years, a large portion of the young and working population will migrate to urban areas within their own and other states, resulting in a rapid and widespread increase in the urban population.
• The focus of urban policy planning should be on how these migrating people can access basic amenities, health, and social services in urban areas.
• Smart City Mission and AMRUT, for example, must be implemented effectively and carefully.

Conclusion

If policymakers align developmental policies with this demographic shift, India will be on the right side of a demographic transition that will provide a golden opportunity for rapid socio-economic development. To benefit from the demographic dividend, proper human capital investment is required, with a focus on education, skill development, and healthcare facilities. This demographic shift also brings with it a slew of new challenges. We would be facing a demographic disaster if the increased workforce was not sufficiently skilled, educated, and provided with gainful employment. We can reap the benefits of the demographic dividend by learning from global approaches from countries like Japan and Korea and designing solutions that take into account domestic complexities.