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Demographic Dividend
The demographicdividendreferstothe acceleratedeconomicgrowththatbeginswithchangesin
the age structure of a country’spopulationasittransitionsfromhightolow birthand deathrates.
Withfeweryoungpeople relativetothe populationof working-ageadults,andwiththe successful
implementationof keynational policiesoverthe longterm, countriessuchasThailandandBrazil
have reapedmanyrewardsfromtheirdemographic dividend.
As a country’stotal fertilityrate (TFR,the average numberof childrenperwoman) drops,the
proportionof the populationunder age 15 beginstodecrease relativetothe adult working-age
population(generallyages15to 64—the childdependencyratio).The declineinthisratiosetsthe
stage for smallerfamilies, whonowhave more resourcestoinvestin the health,education,and
well-beingof each child.Andwithfewerpeopletosupport, acountry hasa window of opportunity
for rapideconomicgrowthif the rightsocial and economicpoliciesare developedand investments
made.Aslongas the child dependencyratiocontinuestodecrease,the window remainsopen.
Eventually,however, people ages65and olderbegintorepresent anincreasinglylargerproportion
of the total population,signallingthe endof the first demographicdividend.
One of India’scompetitiveadvantagesisitsdemographicdividend.Demographicdividendoccurs
whenthe proportionof workingpeopleinthe total populationishighbecause thisindicatesthat
more people have the potentialtobe productive andcontribute togrowthof the economy.
Accordingto the UnitedNational populationresearch,duringthe lastfourdecadesthe countriesof
Asiaand LatinAmericahave beenthe mainbeneficiariesof the demographicdividend.Advanced
countriesof Europe,Japanand USA have an ageingpopulationbecause of low birthratesandlow
mortalityrates.Neitherthe leastdevelopedcountriesnorthe countriesof Africahave asyet
experiencedfavourable demographicconditionsaccordingtothe researchbyUN population
division.China’sone childpolicyhasreversedthe demographicdividenditenjoyedsince the mid
1960s accordingto a World Bankglobal developmentreport.
Fallingbirthratesreduce the overall expenditure requiredtoprovidebasicnecessitiesforthe under
14 age group(whichisyetto be productive) andincreasedlongevityensuresthatalarge proportion
of the populationare withinthe 15-59 age group (workingpopulation).Dependencyratiorefersto
the proportionof non -workingpopulationonthe workingpopulation.InIndiathisratioisaround
0.6 accordingto the World Bank.
However,reapingthe demographicdividendrequiresfocusedpolicyaction.A recentUNESCAP
surveywarnsthere are no guaranteesthe "dividend"will automaticallytranslate toeconomic
growth.Countriesneedtoputinplace the appropriate "social andeconomicpoliciesand
institutions"toabsorbthe rapidlygrowinglabourforce.Reformsinthe healthandeducationsector,
financial inclusionandadequate employmentopportunitiesare essential pre-requisitestoensure
that India’syoungpopulationistrulyanasset.
The PlanningCommissionof India,inits12th Plandiscussions,indicatesthatwhile the “demographic
dividend”accountsforIndiahavingworld’syoungestworkforce withamedianage waybelow that
of ChinaandOECD Countries,the global economyisexpectedtowitnessaskilledmanpower
shortage to the extentof around56 millionby2020. Thus, the “demographicdividend”inIndia
needstobe exploitednotonlytoexpandthe productionpossibilityfrontierbutalsotomeetthe
skilledmanpowerrequirementsof inIndiaandabroad.To reap the benefitsof “demographic
dividend”,the Eleventh Five YearPlanhadfavouredthe creationof acomprehensive National Skill
DevelopmentMission.Variousstrategiesforthe 12th Plan – improvedaccesstoqualityeducation,
betterpreventive andcurative healthcare,enhancingskillsandfastergeneration of employment
are beingfinalizedtoensure greaterproductivityof Indianworkers.

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Demographic Dividend

  • 1. Demographic Dividend The demographicdividendreferstothe acceleratedeconomicgrowththatbeginswithchangesin the age structure of a country’spopulationasittransitionsfromhightolow birthand deathrates. Withfeweryoungpeople relativetothe populationof working-ageadults,andwiththe successful implementationof keynational policiesoverthe longterm, countriessuchasThailandandBrazil have reapedmanyrewardsfromtheirdemographic dividend. As a country’stotal fertilityrate (TFR,the average numberof childrenperwoman) drops,the proportionof the populationunder age 15 beginstodecrease relativetothe adult working-age population(generallyages15to 64—the childdependencyratio).The declineinthisratiosetsthe stage for smallerfamilies, whonowhave more resourcestoinvestin the health,education,and well-beingof each child.Andwithfewerpeopletosupport, acountry hasa window of opportunity for rapideconomicgrowthif the rightsocial and economicpoliciesare developedand investments made.Aslongas the child dependencyratiocontinuestodecrease,the window remainsopen. Eventually,however, people ages65and olderbegintorepresent anincreasinglylargerproportion of the total population,signallingthe endof the first demographicdividend. One of India’scompetitiveadvantagesisitsdemographicdividend.Demographicdividendoccurs whenthe proportionof workingpeopleinthe total populationishighbecause thisindicatesthat more people have the potentialtobe productive andcontribute togrowthof the economy. Accordingto the UnitedNational populationresearch,duringthe lastfourdecadesthe countriesof Asiaand LatinAmericahave beenthe mainbeneficiariesof the demographicdividend.Advanced countriesof Europe,Japanand USA have an ageingpopulationbecause of low birthratesandlow mortalityrates.Neitherthe leastdevelopedcountriesnorthe countriesof Africahave asyet experiencedfavourable demographicconditionsaccordingtothe researchbyUN population division.China’sone childpolicyhasreversedthe demographicdividenditenjoyedsince the mid 1960s accordingto a World Bankglobal developmentreport. Fallingbirthratesreduce the overall expenditure requiredtoprovidebasicnecessitiesforthe under 14 age group(whichisyetto be productive) andincreasedlongevityensuresthatalarge proportion of the populationare withinthe 15-59 age group (workingpopulation).Dependencyratiorefersto the proportionof non -workingpopulationonthe workingpopulation.InIndiathisratioisaround 0.6 accordingto the World Bank. However,reapingthe demographicdividendrequiresfocusedpolicyaction.A recentUNESCAP surveywarnsthere are no guaranteesthe "dividend"will automaticallytranslate toeconomic growth.Countriesneedtoputinplace the appropriate "social andeconomicpoliciesand institutions"toabsorbthe rapidlygrowinglabourforce.Reformsinthe healthandeducationsector, financial inclusionandadequate employmentopportunitiesare essential pre-requisitestoensure that India’syoungpopulationistrulyanasset. The PlanningCommissionof India,inits12th Plandiscussions,indicatesthatwhile the “demographic dividend”accountsforIndiahavingworld’syoungestworkforce withamedianage waybelow that of ChinaandOECD Countries,the global economyisexpectedtowitnessaskilledmanpower shortage to the extentof around56 millionby2020. Thus, the “demographicdividend”inIndia needstobe exploitednotonlytoexpandthe productionpossibilityfrontierbutalsotomeetthe skilledmanpowerrequirementsof inIndiaandabroad.To reap the benefitsof “demographic dividend”,the Eleventh Five YearPlanhadfavouredthe creationof acomprehensive National Skill DevelopmentMission.Variousstrategiesforthe 12th Plan – improvedaccesstoqualityeducation, betterpreventive andcurative healthcare,enhancingskillsandfastergeneration of employment are beingfinalizedtoensure greaterproductivityof Indianworkers.