Demographic Dividend meaning – It is the potential for economic gains when the share of the

working-age population (15 years – 64 years) is higher than the non-working age group.
Demographic dividend occurs when the proportion of working people in the total population
is high because this indicates that more people have the potential to be productive and
contribute to growth of the economy.

Due to the dividend between young and old, many argue that there is great potential for
economic gains, which has been termed the “demographic gift”. In order for economic growth
to occur the younger population must have access to quality education, adequate nutrition and
health including access to sexual and reproductive health.

Demographic dividend takes place when a country undergoes a demographic transition from a
rural agrarian economy with high fertility rates to an urban industrialized economy with low
fertility and mortality rates. This article gives details on demographic dividend and
opportunities that accompany it, in the Indian context. For more information on the IAS Exam,
visit the given link.!!!!

What is a Demographic Dividend?

As per the United Nations Population Fund (UNFPA), the demographic dividend is the
economic growth potential resulting out of changing population age structure with a large
section of people in the working-age group of 15 years to 64 years as compared to the non-
working age population of below 14 years and above 65 years.

Demographic Dividend – Causes

Change in population structure occur due to

1. Falling birth rate

2. Lower fertility rate
3. Increased longevity
Falling birth rate and lower fertility rate will contribute to a reduction in expenditure, increased
longevity will lead to an increase in the size of the working-age population.

Demographic Dividend – Opportunities for India

1. India will have the youngest workforce in the world with a median age much lower than
China and other Developed countries.
2. The other countries will have a higher proportion of the population which is not in the
working-age group which will result in a shortage of manpower to the tune of 56
million.
3. Indian workforce can fill this gap in India and abroad and result in greater economic
growth.
4. During the period of demographic dividend, the personal savings will grow, which
means greater purchasing power, which can lead to the growth of the economy.
To know how demographic dividend and other factors impact the Indian Economy, visit the
linked article.
The Pattern of Demographic Shift in India:

• India’s working-age population is rising and stood at 68% compared with 67.3% in
2020 and 66% in 2015, according to the UNFPA’s State of World Population Report
2023.
• China, on the other hand, has a working-age population of 69%, but it is declining from
70.3% in 2020 and 73% in 2015.
• India’s population in 2023 stood at 1,428.6 million compared to China’s 1,425.7
million, according to the UN report on world population.
• While India is a young country, the status and pace of population ageing vary among
states, according to the UNFPA. Southern states, which are advanced in demographic
transition, already have a higher percentage of older people.
• These differences in age structure reflect differences in economic development and
health, and remind us of states’ very different starting points at the outset of the 2030
Sustainable Development Goals Agenda, according to the UN report.
• India needs to address the diversity between states, according to the UNFPA, but this
also offers boundless opportunities for states to work together, especially on
demographic transition, with the north-central region as the reservoir of India’s
workforce.

Demographic Divided – Challenges facing India

1. Skill development of the working-age population so that they can turn out to be
productive for the country’s economy. By 2031, the overall size of our vast working-
age population would have declined in 11 of the 22 major States. While Kerala’s
population is already aging, in Bihar the working-age cohort is predicted to continue
increasing till 2051. Check out the details on Demographics of India on the page link
provided here.
2. Rate of employability among Indian graduates is on the lower side.
3. As per UNDP report, India ranks very poorly in Human Development Index (HDI).
4. The mean years of schooling and expected years of schooling are very low in India.
5. Unemployment rates are high in rural and urban India.
6. A huge percentage of the population is still dependent on agriculture in India, this
segment is also known for underemployment and disguised unemployment.
7. A huge majority of the workforce is employed in the unorganized sector which is
riddled with low wages and the absence of social security.
8. Fall in female labour force participation in India, as per reports from International
Labour Organisation (ILO) and World Bank. Growing female literacy is not translating
into relevant and marketable skills. Lack of flexible entry and exit policies for women
into virtual classrooms, and into modules for open digital training, and vocational
education limits access to contemporary vocations. Aspirants can check the following
links for further details-
o Gender Inequality and
o Gender Pay Parity

Certainly! Aging populations can lead to several challenges for societies and governments.
Here are some additional problems associated with aging:
1. Pension and Social Security Crisis: As the proportion of the elderly population increases,
there is a greater strain on pension and social security systems. Funding pensions for a larger
elderly population becomes more challenging, especially if there are not enough contributions
from the working-age population.
2. Economic Impact: With a significant portion of the population transitioning into retirement,
there may be reduced consumer spending and a decrease in economic productivity. Older
individuals tend to save more and spend less, which can impact economic growth.
3. Increased Healthcare Costs: Aging populations are often linked to higher healthcare costs.
Older individuals generally require more medical attention and long-term care, placing a
burden on healthcare systems and potentially leading to higher insurance premiums and public
expenditure.
4. Elderly Care and Long-Term Care: Providing adequate elderly care, especially for those who
cannot fully care for themselves, becomes a pressing concern. Nursing homes, assisted living
facilities, and in-home care services may experience increased demand.

5. Intergenerational Tensions: An aging population can create intergenerational tensions, as the

younger working-age population may feel the burden of supporting a growing elderly
population through taxes and social programs.
6. Labour Market Imbalance: As the workforce ages, there might be a shortage of skilled
workers in certain industries, affecting economic productivity and potentially leading to labour
market imbalances.
7. Silver Economy Challenges: The "silver economy" refers to the economic activities and
opportunities related to older individuals as consumers. Meeting the needs and preferences of
an aging population in terms of products and services can be a challenge for businesses.
8. Social Isolation and Loneliness: Elderly individuals may experience social isolation and
loneliness, especially if they have limited social interactions and support networks. This can
have adverse effects on their mental and physical health.
9. Elder Abuse: Aging populations can be vulnerable to various forms of abuse, including
financial exploitation, neglect, and mistreatment. Safeguarding the well-being of the elderly
becomes crucial.
10. Retirement Funding Shortfalls: Individuals may not have saved enough for retirement,
leading to financial difficulties during their elderly years. This can put pressure on social safety
nets and family support systems.