How does Demographic Dividend impact on the India’s economic growth?
In the contemporary world, 'Demographic Dividend' has become a hot topic for the policy makers, economist and experts from the various sectors around the world. Many countries are on the crossover of this potential— with a proportionately large young and working-age population. But much more must be done to enable the dividend: increase the empowerment of girls and women, ensure universal and high quality education that is tailored to new economic opportunities, and expand secure employment.
What is Demographic Dividend?
According to the United Nations Population Fund (UNFPA), the Demographic Dividend refers to “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older).” It can only come into existence, when countries invest in the empowerment, education and employment including good governance.
What is relationship between Demographic Dividend and Economic Growth?
There is a great influence of demographic dividend on the economic growth because the demographic dividend is the economic benefit that can arise when a population has a relatively large proportion of working age people, and effectively invests in their empowerment, education and employment.
According to the Malthus, increase in food production would not be able to keep up with an increase in population because while population grew geometrically, food production only increased arithmetically. He stressed that societies which have high fertility rates would have lower income levels and those with lower fertility rates will have higher incomes. The reasoning behind this inverse relationship is that high population levels would drive down the price of labour and increase the price of food. Hence, he believed that nature had its own checks to balance the world’s population.
Therefore, on the basis of the above argument of Malthus, the economic growth can be defined as ‘a long term rise in capacity to supply diverse economic goods to its population, this growing capacity based on advancing technology and the institutional and ideological adjustments that it demands’.
According to the International Labour Organisation (ILO), the 21st century can belong to India as it has three assets that no country has: ‘democracy’, ‘demand’ and ‘demographic dividend’. But did we wonder why the ILO states that, this is because the greater the share of the population in the working-age group; the more will be the savings and investments in the economy.
The economy can be driven by a fast growth track with other macroeconomic variables like employment, per capita income, saving and investment putting a positive impact on the economic growth of the country only when demographic dividend is taken care of.
Hence, the human resources can only transform into asset through proper recruitment, selection, training, appraising performance, compensating, maintaining relationships, and welfare, health and safety measures of employees in compliance with labour laws of the land.
Therefore, it is of utmost importance that the youth needs to be absorbed meaningfully into the workforce to make it productive enough so that this demographic dividend does not turn into a demographic nightmare.