By Prof. Raj Kishore Panda• in Bhubaneswar, December 24, 2020: On the last May 12, the Prime Minister Narendra Modi while announcing the comprehensive economic package to arrest the present economic slowdown pledged to make India a Self-reliant India or Atmanirbhar Bharat. To achieve this objective, the Central Government in recent days has enacted some key reform laws in labour, farm and other sectors to foster a competitive ecosystem in the country.

However, in the context of achieving self-reliance or Atmanirbhar and push for a faster GDP growth what is very much required is improving the productivity and income of the country’s vast labour force. India with a total population of 135 crore account for having 83 crore (62 percent) working-age population (15-59 years) and thus has to encash in on the demographic dividend to achieve faster and higher economic growth.

Demographic dividend is termed as the rise in the rate of economic growth due to a rise in the share of working –age people in the population of a country. This situation occurs when in a country both fertility and mortality rates decline resulting in the changes in the age structure of the population. With fewer births each year the dependency ratio declines and the country has a window of opportunity for rapid economic growth.

Studies have amply shown how several Asian countries such as Japan, China, South Korea have in the past taken advantage from the bulge in youth population to grow rapidly for a long period. Coming to the case of India, what is observed, over the years there has been rapid decline in infant mortality rate leading to rise in the share of young adults in the population of the country.

More so, at present when most of the developed world including China is growing older, India continues to enjoy the advantages of having the youngest population in an ageing world. Yet the country has not been able to reap the desired dividend from the rising youth population. The unemployment continues to grow in India. Covid-19 led lockdown has further aggravated the unemployment scenario by pushing the economy into recession.

About the current statistics on the unemployment rate in the Indian economy we find the recent report of the Centre for Monitoring Indian Economy (CMIE) which shows that the unemployment rate in the country stands at 7.8 percent by the week ended November22, 2020. It is higher than the pre-Covid figure of 5.5 percent.

Interestingly, even if the country has started with the recovery process since May, the present employment rate of 36.2 percent remains below the pre-lockdown level of 39.4 percent. Thus, in spite of different employment generating initiatives of the Central Government such as self-employment through start-ups, developing skill among the youth through different schemes etc, all these have not raised employment and employability satisfactorily to counter the growing unemployment in the country.

Besides, there is wide variation in the availability of demographic dividend at the national and regional levels as we notice wide regional disparity in labour force growth patterns. States such as Delhi, Tamil Nadu and Maharashtra having lower Total Fertility Rate (TFR) exhibit higher working age and ageing population as compared to the states like Bihar, Madhya Pradesh and Uttar Pradesh having higher TFR but having higher young population. While the former states are at a late stage of demographic transition, the latter ones are in their early stage in this respect. This is revealed when we see migration of workers largely from the latter category of states to the former category of states.

Added to this, the current low female participation rates in India conceal a potential demographic dividend which can be reaped by adopting suitable measures to expand the level of female education and their labour force participation.

According to International Monetary Fund in 2011, India’s demographic dividend has the potential to add two percentage point per annum to India’s per capita GDP growth over the next two decades. Since demographic dividend is a limited time window and as estimated by the International Labour Organization that the predominance of working- age population in India will continue to increase and reach its peak 65 percent in and around 2036 after which it will slide down, this calls for maximizing the demographic dividend through appropriate policy.

With states showing varying total fertility rates leading to the availability of demographic dividend at different times in different states there is need for state specific policy rather than an all-India approach to reap higher economic benefit from bulging youth population. Since quality improvement in the new work force is required to achieve higher productivity a drastic overhaul in educational policies and budgets is very much the need of the hour. India can really become competitive and Atmanirbhar if it uses its best endowment- the vast labour force and appropriates its demographic dividend.

Former Professor of Economics, Utkal University and Director, Nabakrushna Choudhury Centre for Development Studies, (ICSSR Institute), Bhubaneswar.

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