India's youth population alone not enough for demographic dividend: Experts

Gains require an economic system that uses workforce productively, they say

A debate about India having a demographic dividend has begun again after a report by a UN agency said the country's population is dominated by young people.

China's statement that its demographic dividend has not ended because it has a talented labour force has made the debate forceful. China will have 14 per cent of its population aged 65 years or more in 2023. India will have seven per cent of the population aged similarly, showed data provided by the United Nations Population Fund's State of the World Population Report 2023.

China has 18 per cent of the population in 10-24 years of age, while India has 26 per cent in this category. India has the largest youth population with around 254 million in the 15-24 year age bracket, said the report.

While China's fertility rate per woman will be 1.2 in this calendar year, India’s will be 2. If the trend continues, this would ensure more young people in India than China in the years to come.

But does the size of the youth population enable India to enjoy a demographic dividend? Experts said that while the country has an opportunity to reap this dividend, it will have to take policy steps such as labour and land reforms to utilise it. Otherwise, the size of the young population can be a pain too, they warned.

C Rangarajan, former chairman of the Prime Minister's Economic Advisory Council (PMEAC) during the United Progressive Alliance (UPA) regime, said demographic dividend depends on the country's ability to utilise the young population for productive uses.

"Whether the young population is a dividend or a drain depends on the way we manage our economic system," said Rangarajan, who is now chairman of the Madras School of Economics.

Improved technology, higher savings and investment rates have to be there to use the young population for higher economic growth, he said.

Amitabh Kundu, a senior fellow at think tank WRI India, said while India has an advantage over China in the sense that it has fewer dependent people, the former has been spending less on developmental activities.

The quality of people and the number of people with school and college education is higher in China, he said. While size is important, the labour force’s skills are important too.

India will enjoy the demographic advantage till around 2040, said Kundu.

In China, 78.3 per cent of the female population and 85.4 per cent of the male population aged 25 years and older had some secondary education in 2021. India was 41.8 per cent and 53.8 per cent in these parameters, according to the human development report for 2021-22 by United Nations Development Programme (UNDP).  

N R Bhanumurthy, vice chancellor at B R Ambedkar School of Economics, said India has an opportunity to reap demographic dividend if the union and state governments take up reforms.

"You need higher productivity from all the factors of production," he said, adding that land and labour reforms are pending in India.

He said the share of manufacturing must rise to 25 per cent of GDP for India to utilise the young population. Manufacturing was projected to have 13.3 per cent share in GDP for 2022-23, according to advance estimates.