How India Is Managing Its “Demographic Dividend”?

Written By: Dr. Devendra Kothari

Many Indians including policy makers now see demographics as a critical advantage in competition with the nation it regards   as its chief rival – China. They argue that China will get old before it gets rich, and India will reach middle income status while it is still young. Entrepreneur-turned-technocrat Nandan Nilekani has portrayed a bright future for the Indian youth in his book – Imagining India: Ideas for the New Century (2008). And policy makers like him believe that India has an inevitable advantage in its young “human capital”.

Nilekani noted that: “Looking around, I think that if people are the engine of India’s growth, our economy has only just begun to rev up”. He questioned the issue of fast growing population faced by the country:  “But in the last two decades, this depressing vision of India’s population as an ‘overwhelming burden’ has been turned on its head. With growth, our human capital has emerged as a vibrant source of workers” (page 39).  With around 70% of the population under 35, India can afford to dream to become economic power in the world before the middle of this century.

The median age is a single index that summarizes the age distribution of a population. It divides a population into two numerically equal groups; that is, half the people are younger than this age and half are older. The median age of population in India was 25 years in 2010, as against 35 in China, 37 in USA, 44 in Germany and 45 in Japan. The corresponding figures would be 37, 49, 40, 49 and 52, respectively in 2050.

It appears that the dreams are taking concrete shape; it’s what the world calls a “demographic dividend”. The phrase was coined by demographer David Bloom in the early nineties. He proposes that when young working-age adults comprise a disproportionate percentage of a country’s population, the national economy is affected in positive ways. It was first applied to the favorable circumstances faced by such countries as Singapore, Taiwan, Hong Kong and South Korea in the second half of the last century when these “tiger economies” grew at record levels of 10 to 12% for more than twenty years, catapulting their respective economies to First World status in just one generation.

Here, a population “bulge” in the working-age groups (15-59) is seen as an inevitable advantage. India’s working-age population, as of now, largely consists of youth (15-34 years), and as a result its economy has the potential to grow more quickly than that of many other countries, including China. It is because China will soon begin ageing due to its one child policy and as a result will become less competitive. The promise of demographic dividend will not last long. Can India take advantage of this demographic window in the next few years and benefit from it? The post aims in this direction.

Demographic dividend or disaster:

According to the UN Population Division, while the proportion of population in the less than 15 age group declined from 41% in 1971 to 31% in 2010, the proportion of population in the age group 15-59 increased from 53% to 62% during the same period. The proportion of those above 60 years of age also increased from 5% to 10%. In terms of absolute numbers, the increase in the working age-group population is even more dramatic: from 296 million in 1970 to 757 million in 2010. This segment of the population is projected to peak at 1048 million in 2050, while a reverse trend will be observed in China, as shown below:

Table 1 India and China: Trends working population (15-59 years)  

Year	India		China
	Working Population (in  million)	Per cent  of total population	Working Population (in  million)	Per cent  of total population
1970	296	53	438	54
2010	757	62	915	68
2020	875	63	914	66
2050	1948	62	682	53
Source: UN Population Division, United Nations

The conventional view is that India will be able to put all these people to work because of its relative strong education system, entrepreneurial zeal, and strong links to the global economic mainly due to the proficiency in  English.  “All that is real, but India is already showing some of the warning signs of feared growth stories, including early on set of over confidence”, noted by  Ruchir Sharma, Head of global emerging markets equity team at Morgan Stanley Investment Management Inc., who authored the highly acclaimed book:  Breakout Nations: In Search of The Next Economic Miracles (2012).

He writes further: “Yes, a growing pool of young workers can be huge advantage, but only if a nation works hard to set them up for productive career”. No doubt, when conditions are right, large numbers of young workers can drive a nation’s growth to remarkable levels. Now question arises whether India is geared enough to garner its demographic gift?

We are frequently reminded of our demographic dividend – the fact that a majority of our population (slightly less than70%) is under 35 years of age. But what sort of these people are.  Based on the National Family Health Survey-3, it is estimated that   about 30 per cent or around 218 million people in this young age group was the product of unwanted childbearing. The level of unwanted fertility in this age group has increased from 23 per cent in 1992-93 to 30 percent in 2005-06, as shown in Table 2. It is mainly due to the poor population stabilization policies carried out by India.

Table 2 India:  Level of unplanned /unwanted fertility in age group 0-35, 1992-2006

National Family Heath Survey	Total population aged 0-35 (in million)	Total population aged 0-35 result of unwanted  fertility  (in million)	Per cent of total unwanted population in age group 0-35
1992-93 (NFHS-1)	635	140	22.1
1998-99 (NFHS-2)	698	178	25.5
2005-06 (NFHS-3)	736	218	29.6
Computed by the author by using data obtained from National Family Health Survey 1, 2 & 3 and Registrar General of India.  For details, see: Devendra Kothari, “Implications of Emerging Demographic Scenario: Based on the Provisional Results of Census of India 2011”,  A Brief,  a publication of Management Institute of Population and Development – A Unit of Parivar Seva Sanstha, New Delhi, 2011

The consequences of unwanted fertility are serious, slowing down the process of socio-economic development. It is because unwanted childbearing results in poor physical growth, reduced school performance, diminished   concentration in daily tasks thus impacting work capacity and work output resulting in diminished earning capacity; and it is reflected in widespread hunger/malnutrition, poverty, unemployment as well as increasing scarcity of basic resources like food, water and space in several parts of India despite concerted developmental efforts since 1991.

Various reports, released recently, reveal that   things are not improving in India at all. In fact, things are going from bad to worse. India’s rank in the latest UN’s Human Development Report has fallen from 119 in 2010 to 134 out of 187 countries and territories in 2011. In addition, the 2011 Global Hunger Index Report places India amongst the three countries where the GHI between 1996 and 2011 went up from 22.9 to 23.7, while 78 out of the 81 developing countries studied succeeded in improving hunger condition.

The HUNGaMA (Hunger and Malnutrition) survey carried in 2011 and released by the Prime Minister of India on January 10, 2012 reconfirms that malnutrition among children in India has taken ominous proportions, and the situation in many districts of the country has worsened when compared to what it was about a decade back. The report reveals that over 40% of children are underweight and almost 60% are stunted. India is simply not doing enough for its women either. The country has fallen from 112 out of 134 countries in 2010 to 113 out of 135 countries in 2011 according to the Gender Gap Index 2011 released by the World Economic Forum. Their participation in the gainful employment has not shown an improvement.

In addition, three recent studies paint a grim picture of school education in India -  OECD’s Programme for International Students Assessment (PISA) study ranked Indian higher secondary students only better than those from Kyrgyzstan, which ranked last  among 74 participating countries; NGO Pratham`s  Annual Status of Education Report (ASER), 2011, assessing schools in rural India, found sharp declining reading and mathematical abilities of children in the six to 14 years age category; and lastly  Wipro’s EL Quality Education  Study 2011 of India’s elite schools, shows that learning levels are not on par with international standards.  Taken together, these three reports make it amply clear that despite a welcome high enrolment rate – around 97% – at the primary and upper primary levels, the quality of school learning is simply not up to the mark.

Though India’s children are attending schools, but a large number are not learning even basics, since teaching standards are poor, with high teacher absenteeism. It is little wonder then that only 48% of class V students surveyed under ASER were able to read class II-level texts, among other depressing statistics. It is because the largest part of India’s schools is of poor quality. Teachers are inadequately prepared, weakly motivated, poorly paid, and frequently absent.

Also, the higher education scenario is at crossroads. The universities are suffering from resource crunch, quality and employable placement of the students. According to Prof. Philip Alibach, Director of the Center for International Higher Education at Boston College, USA and Dr.  N. Jayaram of  Tata Institute of Social Science, Mumbai that: “The overall quality of the higher education system is well below global standards and it has shown no significant sign of improving.

High-tech employers complain that a large majority of engineering and other graduates are inadequately trained and must be‘re-educated, at considerable expense, by their employers or not hired at all”. On the quantitative side too, there are problems. India now educates only 10 per cent of the age group in higher education. “A growing number now attends often low-quality colleges and other institutions that are not funded by the government — some of which are little more than teaching shops and degree mills”.  Clearly, India is frittering away the opportunity of capitalizing on the ‘demographic dividend’.

It is because India has a serious “infrastructure problem” in education as it does with roads, ports, public transportation, water and electricity supply, and so on. Long-term inadequate spending on infrastructure and poor planning will catch up with India’s booming economy at some point, and in fact it is happening currently. While delivering the Eighth JRD Tata Memorial Oration, Dr. Manmohan Singhsaid, “Human population is an important constituent of the sustainable development agenda. However, a fast growing population is leading to a significant diversion of national investable resources to consumption which could otherwise be used for increasing investment and productivity and for improving the quality of public social services such as education, health, sanitation, provision of safe drinking water and for control of environmental degradation”[6]. And that is happening in India due to stalled demographic transition.

Use of “demographic opportunity” or “demographic window” is all about systematic planning and implementation and there is no magic wand which can be switched on and off at will. It is time to reorder priorities and ensure that the nation’s interest always comes first.  The most important and positive steps are still largely unrecognized by policymakers as well as by the bilateral and philanthropic organizations. More than four in ten pregnancies are unintended by the women who experience them, and half or more of these pregnancies result in births that spur continued population growth. Despite improved availability and access to contraceptive services, a substantial proportion of pregnancies (21% of all pregnancies that result in live births) are mistimed or unplanned as per NFHS-3.

Around 26 million children are born in India every year and out of this about 5.5 million births have been classified as unplanned/unintended.  India must revamp its population stabilization program to avoid unwanted child bearing.

Another issue which needs equal attention is quality of education. Unless education is rescued from quagmire of mediocrity, all talk about developing a skilled human resource pool and realizing the country`s demographic dividend will be without substance; and the country would be inching closer to demographic disaster. As such, investment in education has to be increased to improve the quality of education especially at the government schools and colleges where most of the students are from poor and rural families.

I will like to conclude in the words of N.R. Narayana Murthy, who was ranked among the ten most-admired global business leaders in 2005 by The Economist, and author of highly acclaimed book: A Better India: A Better World, (2009): “Economic growth and prosperity require not just growing population, but also what economists call ‘good human capital’ – a population equipped with the skills and resources to participate in the economic. With limited progress in human development, India’s large population can become a liability rather than an advantage.

A failure to stabilize India’s population will have significant implications for the future of India’s economy” Thus the demographic predictions are loud and clear: that the promise of demographic dividend will not last long, in any case beyond 2050. Can India take advantage of this demographic window in the next couple of decades and garner its benefits? One cannot be too optimistic about this trend considering above facts. Hope policy makers are listening!

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