India's Youth Can Revive Economic Growth. But Will Govt Harness The Opportunity?

World Population Day, celebrated on July 11, highlighted the challenges and opportunities faced by an ever-increasing population. In this context, to check the reality of the much-debated topic of ‘Demographic Dividend’ in India is warranted.  India’s demography has been a major talking point in policy circles, and international, national-level conferences. For many years, India’s increasing population was a cause of concern for policy makers. But since the last decade, talks have drawn attention towards optimum utilisation of the country’s augmenting youth population, which can potentially set India on path of economic progress.

Today, India is one of the youngest countries in the world with an average age of 29 years. It is the home to the highest number of youth in the world, which constitutes around 28% of country’s population. While the number of elderly people is increasing steadily in the rest of the world, particularly in developed countries, the young (15-29 years) and working (15 to 59 years) population in India is constantly rising. As of 2017-18, the working population of India stands at around 64 per cent of the total population. It is expected to rise to about 66 per cent over the next decade. Hence, in the years to come, it will be a great opportunity for the government to harness India’s ‘Demographic Dividend’.

Demographic Dividend only occurs when the share of working population, including youth, is high and increasing, and as a result more people have the potential to be productive and contribute to the national income, savings, per-capita income and growth of the economy. The literature suggests that realisation of demographic dividend will result in growth acceleration and prosperity of the economy. The case of East Asian economies has been quoted time and again as an example to support this argument, where countries such as Japan, South Korea, Singapore, and Thailand experienced high level of industrialisation and urbanisation in the last four decades of the 20^th century.

However, the United Nations Population Fund’s (UNPF) study has highlighted that India will witness a longer duration of demographic dividend from 2005-06 till 2055-56. But the ‘boom’ of ‘demographic dividend’ is expected to remain restricted to selected states in different phases due to their varied population structures wherein, the Total Fertility Rate (TFR) is a key indicator of population growth. For instance, the 2017 Sample Registration Survey Report (SRS) shows that all southern and many western states already have a TFR of below 2.1, which is the tipping point wherein a population replaces itself. On the other hand, in underdeveloped states such as Jharkhand, Chhattisgarh, Madhya Pradesh, Rajasthan, Uttar Pradesh and Bihar, the TFR is still higher than 2.5. The UNPF study also confirmed that the opportunities for 'demographic dividend' have been closed in all the southern and western states like Kerala, Tamil Nadu, Delhi, Andhra Pradesh, Telangana, Gujarat, Punjab, West Bengal and Karnataka. In states like Odisha, Himachal Pradesh, Maharashtra, Jammu and Kashmir, Assam, Uttarakhand and Haryana, opportunities will be closed in the next few years. Benefits of ‘demographic dividend’ are likely to be seen only in few under-developed states such as Jharkhand, Chhattisgarh, Madhya Pradesh, Rajasthan, Uttar Pradesh, and Bihar.

Increasing joblessness among educated youth is a serious concern, particularly post-graduates and graduates. A paradoxical situation exists in the country, wherein, despite abundance of human capital, industries report that they are unable to fill vacancies due to lack of skilled workers. On the other hand, there is a huge unemployment problem among highly educated people. This is a two-way problem of employment and employability.

An immense challenge that lies ahead is that of providing skill training, which will generate employment for millions entering the job market every year. The government has made considerable efforts to provide adequate employment opportunities through several livelihood and welfare schemes such as National Rural and Urban Livelihood Mission, Mahatma Gandhi National Rural Employment Guarantee Scheme, Startup Village Entrepreneurship Programme, Johor, Employment Fair, Mudra, National Skills Mission, etc. As per the economic survey of 2019-20, 2.62 crore regular wage category jobs have been created between 2011-12 and 2017-18. Around 69 lakh candidate were trained under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) as of November, 2019. However, the job creation is far less than the requirement of roughly 55-60 lakh people who enter the labour force every year. In addition, a large number of youth who are trained under various skilled development programmes are still unemployed or engaged in menial jobs.

Additionally, amidst the economic setbacks suffered due to COVID-19 pandemic, the plight of those entering the labour market this year is especially concerning. Many are opting for jobs in the informal sector, wherein they are deprived of benefits entrenched in social protection provisions, which heightens their vulnerabilities. Over 90% of the workforce engaged in informal sector is employed without any social security benefits.

In the last two decades, the average economic growth rate of India has been decent but the country has not been unable to create enough new employment opportunities for the growing number of youth. This increasing number of idle youth would not only lead to economic loss for the country, but will also result in disastrous social consequences in the future.

In sum, the 'Demographic Dividend’ is a limited time opportunity. If appropriate steps are not initiated in time by the select states, then this ‘Demographic Dividend’ will turn into a disaster. We have experienced this during the coronavirus-induced lockdown, when a large number of youth returned to their native places after facing many difficulties. Most of these returned youth belonged to states such as Uttar Pradesh, Bihar and Jharkhand, where the demographic dividend window is expected to remain open for the next few decades. It primarily depends on how the government prepares its young population for the future. According to Thomas Malthus, a renowned Economist and Demographer, if adequate supply of resources has not been provided for the growing population, the gap between the population and the resources will increase in the long run, and this may lead to poverty and inequality in the region, also known as 'Malthusian catastrophe'.

(Balwant Singh Mehta is Senior Fellow at the Institute for Human Development, Delhi and Research Director (Hon.), IMPRI, Delhi. Apoorva Gupta is Research Assistant at the Institute for Human Development, Delhi. Views expressed are personal.)