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Demographic Dividend Boon OR Bane
Demographic Dividend Boon OR Bane
Aparna Shukla
Associate Professor
Dr. VSIPS, Kanpur
Dr. A.K. Tomar
HOD, D.S. College, Aligrah
Abstract
Demographic dividend is an opportunity for India if it grasps it accordingly. There was a
major role of DD in economic growth of China. Now a day India is very much aware about
this opportunity but there is a need of proper planning and strategy formulation. This paper
is an attempt to find and analyse the correlation between economical and social factors with
successful DD through various equations. This paper also compares Chinese and Indian DD
competencies.
Key Words: Demographic Dividend (DD), Per Capita Income, Working Age Population ,
workers Participation Rate, skill Labour.
It is true that dramatic declines in fertility throughout much of the worldbut especially in
East Asiahave produced an initial demographic dividend. Many countries with falling
fertility have been able to devote more human and financial capital to the market economy
rather than to child rearing, thereby enjoying high levels of economic growth.
Indian DD:
In the near future India will be the largest individual contributor to the global demographic
transition. A 2011 IMF Working Paper found that substantial portion of the growth
experienced by India since the 1980s is attributable to the countrys age structure and
changing demographics. The U.S. Census Bureau predicts that India will surpass China as the
worlds largest country by 2025, with a large proportion of those in the working age category.
Over the next two decades the continuing demographic dividend in India could add about two
percentage points per annum to Indias per capita GDP growth.
No country is better poised to take advantage of the demographic dividend than India In
2020, the average age in India will be only 29 years, compared with 37 in China and the
United States, 45 in western Europe, and 48 in Japan. Moreover, 70 percent of Indians will be
of working age in 2025, up from 61 percent now. Also by 2025, the proportion of children
younger than 15 will fall to 23 percent of Indias total population, from 34 percent today,
while the share of people older than 65 will remain around just 5 percent.
Demographic Dividend of India & China
Contribution
of
DD
in
chinas
to
China's
economic
Like
many
developing
In India ratio of
working age to non
working
age
increasing
is
in
comparison to other
Asian
countries.
as
an
upcoming economic
giant in this region.
Improvements in Literacy Rate
almost
three
quarters
1993-94 to
20041993-94 to
05(%)
2004-05
(%)
Agriculture
Self 1.01
Non- agricultural self employment
3.86
employment
Nonagricultural
wage
employment
3.18
Agriculture
wage -0.89
Rural Non- agricultural employment 3.52
employment
Urban
Nonagricultural 3.46
Total
Agriculture 0.40
employment
employment
Secondary sector employment
3.70
Agricultural GDP
2.37
Tertiary sector employment
3.35
Implied
employment .17
Total Non- agricultural employment
3.49
elasticity
Non- agricultural GDP
7.71
Real Agricultural Wage 2.15
Implied employment elasticity
.45
rate(
CPIAL
deflated)
Average
Real
Non- agricultural Wage 2.77
rate
Source: Using NSS Employment and Unemployment Survey unit record data
The unemployment rate by year interval age groups shows that it is the highest among the
younger cohorts especially 15 to 24 years age cohorts. In other words, the incidence or
instances of those who are willing to work and available for the labour market but unable to
find the work or employment is higher among the young (below 30 years) when compared
to their seniors (30 + age). It is highest among the 20 to 25 years age cohorts. The situation
of young jobseekers in comparison to adults seems to be hard.
other sectors.
there
is
no
has
higher
education gross
enrolment ratio
of only 12.4%.
The
remaining
various
points
in
school.
Only
total
seven
of
million
only
2%
of
the Indian
workforce has
formal training as
against an average
of 75% in Europe.
WEAKNESS
OPPORTUNITY
Most of Indias
working
age
population
is
employed in the
informal sector.
Lesser female
workers
participation
Lesser
infrastructural
growth.
slightly higher
rates
of
coverage
by
public pensions
Less
workers
savings
and
investment
which
creates
burden on the
government.
Indias
manufacturing
sector remains
weak
Disparities
in
human
development
across different
regions of India.
Inadequately
educated labor
in the northern
parts of the
country.
THREAT
Where
WA
N
Y
N
population and
Y
WA
Y
WA
is working age
population.
Above given equation shows the dependency of per capita income on number of working age
population and also on per capita income to number of working people.
All the above things in favour of India as it is shown in given chart
The per
capita
income
of
Indians for
the
Rs
50,000-
mark in 2010-11,
although
using
current prices as
the
barometer.
According to the
revised GDP data
for
the
last
Barro & Sala i Martin (1995), gave an equation for Growth rate of per capita income
which depends upon
.
Y
.
Z
.
W
.
Z
.
W
where
z* is the steady-state level of income per worker and z0 is the initial level of income
per worker. is the speed of convergence to the steady state, which may depend on factors
such as life expectancy, educational attainment, and the capital stock.
According
to
the
Population
Conclusion: The above analysis showes that there is positive relationship between
favourable economical and social factors and successful DD and also the positive correlation
between the life expectancy and per capita income to working population. The lesson here is
that nations wishing to enjoy robust economic growth and viable welfare states over the longterm must maintain fertility rates high enough to avoid shrinking workforces and rapidly
aging populations. A recent Rand report noted, for instance, that India will have more
favourable demographics than China in the long-term, insofar as its workforce is predicted
to grow, not shrink, over the next few decades (see below).1 Indeed, the report suggests that
in this century, India may be able to turn this demographic advantage into higher economic
growth rates than even China has enjoyed but the thing is to mould it positively
References:
David Bloom argues, for instance, that more than 25 percent of the per capita GDP
growth associated with the East Asian economic miracle of the late twentieth
century can be attributed to the fact that the total fertility rate in East Asia fell from
about six children per woman in 1950 to less than two today.
As Phillip Longman and his colleagues point out in The Empty Cradle, on current
course, countries like China and Japan are poised to see their workforces shrink by
more than 20 percent between now and 2050 because of persistently low fertility,
percentage points.
Yong Wang and Kamhon Kan.Examining projected changes in the size of the labor
force in China and India provides a straightforward way of considering the interaction