India’s population power: Can we turn our demographic dividend into a Viksit Bharat by 2047?

But scratch the surface and the numbers show that maintaining this momentum in economic growth would require concerted efforts, not least being a focus on its population and ensuring that not only is it productively employed but it also has the wherewithal to remain so in the coming decades.

Alakh N. Sharma, Professor and Director at the New Delhi-based Institute for Human Development (IHD), says India’s demographic advantage will continue till 2036 or until a maximum of 2040, after which the working-age population will begin to decline. “This advantage enables more people to participate in productive work and contribute to the national income,” he says, adding that the proportion of youth and children in the country’s population has already begun to fall.

Nagesh Kumar, Director and CEO at the New Delhi-based Institute for Studies in Industrial Development (ISID), says that as long as people have purchasing power, they will create demand. “Part of the dynamics of the Indian economy even now is due to our youthful population that has led to higher demand and growth. In contrast, countries like Japan, South Korea and Europe face low or flat economic growth as their population growth has saturated or is shrinking,” he says.

But experts note that government policies must be aimed at improving social and economic indicators, including health and education, job creation, urbanisation and social security for its soon-to-be-ageing population to ensure that the growth momentum does not fall in the coming years.

India’s literacy rate is at 77%, youth unemployment remains high, and the World Bank pegs India’s GDP per capita at $2,484.8, making it a lower middle-income country. India’s Human Development Index (HDI) has, however, seen an uptick and the country is ranked in the medium human development category, with a position of 134 out of 193 countries, according to the Human Development Index 2023-24 of the United Nations Development Programme.

In 2022, India saw improvements across all HDI indicators—life expectancy, education, and Gross National Income (GNI) per capita. Life expectancy rose to 67.7 years, expected years of schooling reached 12.6, mean years of schooling increased to 6.57, and GNI per capita touched $6,951, according to Human Development Index 2023-24 of the United Nations Development Programme.

As part of its efforts to become a developed economy by 2047, the government hopes to have 100% literacy, lower fertility and infant mortality rates, as well as improvement in the life expectancy rate (see graphic ‘Target for 2047’ below).

Improvement in education and skilling must be the most important agenda for the government in the next few years to ensure that people are employable and are able to get jobs in the changing economic dynamics, say experts.

Demographic Advantage

Kumar of ISID points out that the demography accords to India a unique advantage in today’s world economy: the Indian sub-continent and Africa are the only two regions that can provide future workers. The rest of the world have either aged societies or are ageing very fast. “India has a serious opportunity to emerge as the manpower and skilled workforce capital of the world,” he says, adding that the country will have a youthful workforce till 2050. “But for this to be a real advantage, the youth need to be skilled and capable to meet the demand and new jobs that will come up with Industry 4.0.”

Sharma of IHD agrees and points out that 40% of the population has not passed Class X or Class XII. “For demographic dividend, people need to be educated. This is required even in jobs in the manufacturing sector,” he says.

Other aspects that require urgent attention from policymakers include increasing the participation of women in the workforce, a focus on urbanisation and urban infrastructure to tackle the rising migration from rural areas as well as policies to meet the needs of an ageing population.

To be fair, the government has already been working on many of these fronts. The Interim Budget 2024-25 had announced that a high-powered committee for an extensive consideration of the challenges arising from fast population growth and demographic changes would be set up. The committee will be mandated to make recommendations for addressing these challenges comprehensively in relation to the goal of Viksit Bharat, Finance Minister Nirmala Sitharaman had said then. Officials have indicated that there would be progress on this announcement in the coming months.

The Budget in July also announced measures for job creation and skilling to meet the challenge of high youth unemployment. Deepa Kumar, Head of Asia-Pacific Country Risk at S&P Global Market Intelligence, and Sophie Malin, Principal Economist at S&P Global Market Intelligence, note that efforts from both the public and private

sectors to provide youth job opportunities will be key in helping to provide the employment support needed.

With 15% of its population expected to be aged over 60 years by 2036, a concerted effort on social security, retirement benefits and pension has to be made. A recent report by the Asian Development Bank (ADB), called ‘Aging Well in Asia’ notes that a concern across the Asia and Pacific regions is the risk that societies will grow old before they amass sufficient resources to adequately support their ageing populations. It notes that India had the lowest health insurance coverage among older people at 21%. Financial preparedness for retirement according to its newly developed financial preparedness index was high in India at 73%. However, the report notes that in countries including India, China, and South Korea, 80-90% of financial resources for retirement come from private income and assets, not public pensions or social assistance.

Kumar and Malin of S&P Global Market Intelligence believe that the Indian labour market offers great opportunities for leveraging untapped labour, despite an ageing population. “The relatively low labour force participation rate, especially within women, means that there is ample labour out there that is not being fully utilised,” they say.

India has come a long way in many of these indicators in recent years and with several years still to go to before the population structure begins to change, the optimism around the Indian economy and its people remains intact. It may be a race to the finish, but the consensus remains that India@100 is likely to emerge much stronger on the backs of billions of Indians.

@surabhi_prasad