Status of Human Resource in India

India is experiencing a unique and extended period of demographic dividend, a term that refers to the economic growth potential resulting from a larger working-age population compared to the dependent age groups. Currently, 62.5% of India’s population falls in the 15-59 age range, with projections indicating a peak around 2036 at approximately 65%. This demographic advantage, which began in 2005-06, is expected to last until 2055-56. According to the Economic Survey 2018-19, India’s demographic dividend will reach its zenith in 2041, with the working-age population (20-59 years) expected to constitute 59%.

Notably, India stands out with one of the youngest populations globally, with a median age of just 28 by 2020, compared to higher median ages in other countries. This shift towards a larger working-age population relative to dependents is projected to continue until 2055, spanning a significant 37-year period. The United Nations Population Fund’s study on demographic dividend in India emphasizes that this unique opportunity spans five decades, from 2005-06 to 2055-56, making it longer than any other country globally. Additionally, the availability of this demographic dividend varies across states due to distinct population behaviors.

Advantages Associated with Demographic Dividend

Better economic growth brought about by increased economic activities due to higher working age population and lower dependent population. It will be channelised in following ways:

Our growing labor force is like a dynamic force fueling the engine of our economy, bringing in increased productivity and driving progress.
The bonus of a demographic dividend allows us to shift resources from child-centric spending to investments in essential physical and human infrastructure, paving the way for a brighter future.
As fertility rates decline, we witness a rise in the number of women entering the workforce, becoming a new force propelling economic growth and innovation.
The prime working age is also the golden period for saving, contributing to an overall increase in the savings rate and financial stability for individuals and the nation.
A significant shift toward a middle-class society is underway, creating an aspirational class that not only drives economic growth but also shapes the character of our nation.
Throughout history, the demographic dividend has played a crucial role, accounting for up to 15% of the overall growth in advanced economies.
Japan was a pioneer in experiencing rapid economic growth due to a changing population structure, marking a demographic dividend era that spanned from 1964 to 2004.
A surge in employment-seeking individuals is pushing rapid industrialization and urbanization, fostering higher economic activities and transforming the landscape of our nation.
With over 65% of the population in the working age bracket, India is poised to emerge as an economic superpower, supplying more than half of Asia’s potential workforce in the coming decades.
By factoring in population dynamics, fine-tuning the planning and implementation of policies becomes a key to achieving greater socio-economic impact and delivering larger benefits to the people.

Challenges Associated with Demographic Dividend

Asymmetric demography: The growth in the working-age ratio is likely to be concentrated in some of India’s poorest states and the demographic dividend will be fully realized only if India is able to create gainful employment opportunities for this working-age population.

Lack of skills: Most of the new jobs that will be created in the future will be highly skilled and lack of skill in Indian workforce is a major challenge. India may not be able to take advantage of the opportunities, due to a low human capital base and lack of skills.

Low human development parameters: India ranks 130 out of 189 countries in UNDP’s Human Development Index, which is alarming. Therefore, health and education parameters need to be improved substantially to make the Indian workforce efficient and skilled. Informal nature of economy in Indiais another hurdle in reaping the benefits of demographic transition in India.

Jobless growth: There is mounting concern that future growth could turn out to be jobless due to de-industrialization, de-globalization, the fourth industrial revolution and technological progress. As per the NSSO Periodic Labour Force Survey 2017-18, India’s labour force participation rate for the age-group 15-59 years is around 53%, that is, around half of the working age population is jobless.

Suggestions for Improving Human Resources and Building Human Capital

Building human capital: Investing in people through healthcare, quality education, jobs and skills helps build human capital, which is key to supporting economic growth, ending extreme poverty, and creating a more inclusive society. Skill development to increase employability of young population. India’s labour force needs to be empowered with the right skills for the modern economy. Government has established the National Skill Development Corporation (NSDC) with the overall target of skilling/ up skilling 500 million people in India by 2022.

Education: Enhancing educational levels by properly investing in primary, secondary and higher education. India, which has almost 41% of population below the age of 20 years, can reap the demographic dividend only if with a better education system. Also, academic-industry collaboration is necessary to synchronise modern industry demands and learning levels in academics. Establishment of Higher Education Finance Agency (HEFA)is a welcome step in this direction.

Health: Improvement in healthcare infrastructure would ensure higher number of productive days for young labourforce, thus increasing the productivity of the economy. Success of schemes like Ayushman Bharatand National Health Protection scheme (NHPS) is necessary. Also nutrition level in women and children needs special care with effective implementation of Integrated Child Development (ICDS) programme.

Job Creation: The nation needs to create ten million jobs per year to absorb the addition of young people into the workforce. Promoting businesses’ interests and entrepreneurship would help in job creation to provide employment to the large labourforce. India’s improved ranking in the World Bank’s Ease of Doing Business Index is a good sign. Schemes like Start-up India and Make in India , if implemented properly, would bring the desired result in the near future.

Urbanisation: The large young and working population in the years to come will migrate to urban areas within their own and other States, leading to rapid and large-scale increase in urban population. How these migrating people can have access to basic amenities, health and social services in urban areas need to be the focus of urban policy planning. Schemes such as Smart City Mission and AMRUT needs to be effectively and carefully implemented.

Way Forward

India is currently in a favorable position in the demographic transition, presenting a great opportunity for rapid socio-economic development. To make the most of this potential, it is crucial for policymakers to align development strategies with the ongoing demographic shift.
In order to harness the demographic dividend, it is essential to make substantial investments in human capital. This involves a focus on education, skill development, and healthcare facilities to ensure the well-being and competence of the growing population.
While the demographic transition brings promising prospects, it also introduces intricate challenges. If the expanding workforce lacks adequate skills, education, and opportunities for gainful employment, it could lead to a demographic disaster.
To avoid such a scenario, there is a need to draw insights from global models, particularly those of countries like Japan and Korea. By tailoring solutions to accommodate domestic complexities, we can effectively capitalize on the benefits of the demographic dividend.

Read Also: Demographic Dividend