Answer

Demographic dividend refers to the economic growth potential arising from a shift in a country’s age structure, typically when the working-age population (15-64 years) surpasses the dependent population. India, with over 65% of its population below 35 years (UNFPA), stands at a crucial juncture. However, rising unemployment, low female labor force participation, and skill mismatches threaten to turn this opportunity into a liability. 

India’s Diminishing Window to Capitalize on Its Demographic Dividend

• Declining Timeframe for Advantage: India’s working-age population (15-64 years) is projected to peak by 2047, after which the demographic shift will reduce the workforce size.
  For example: China’s rapid economic rise was fueled by a similar demographic window (1980-2010), but post-2010, the aging population slowed its growth.
• High Unemployment Rate: Despite a large workforce, job creation has not kept pace with population growth, leading to high youth unemployment.
  For example: As per the latest available Annual PLFS reports, the estimated Unemployment Rate (UR) on usual status for youth of age 15-29 years in the country in the year 2023-24 was 10.2%
• Low Skill Development: As per Economic Survey 2023-24, only 51% graduates are employable reducing global employability in high-demand sectors like AI and robotics.
  For example: According to the International Labour Organisation (ILO), India is likely to face a shortage of 29 million skilled personnel by 2030.
• Migration Crisis: Brain drain and unsafe illegal migration indicate a lack of domestic opportunities, pushing youth toward uncertain futures abroad.
• Slow Socio-Economic Mobility: Poor education, lack of healthcare, and regional disparities hinder social mobility, keeping large sections of youth in low-income jobs.

Challenges in harnessing India’s young population for economic and social development

Economic Challenges

• Jobless Growth: India’s GDP grows without proportional employment, with industries increasingly favoring automation over manual labor.
  For example: The fall in the number of enterprises from 2015-16 to 2021-22 was sharpest in the manufacturing sector, with a decline of 24 lakh enterprises. 
• Poor Industrial Training: The lack of industry-academia collaboration means graduates are not trained in market-relevant skills, reducing employability.
• Limited Entrepreneurship Support: High bureaucratic hurdles, lack of seed funding, and complex regulations discourage young entrepreneurs from starting businesses.
  

Social Challenges

• Weak Education System: Public schools suffer from high dropout rates, poor teacher quality, and outdated curricula, failing to equip students with competitive skills.
  For example: The ASER Report 2022 found Nationally, the proportion of children enrolled in Std V in government or private schools who can at least read a Std II level text fell from 50.5% in 2018 to 42.8% in 2022.
• Healthcare Deficiencies: Malnutrition, stunting, and poor healthcare access affect cognitive and physical development, limiting productivity.
  For example:  As per National Family Health Survey-5 (2019-21) 38% of children under six are stunted due to malnutrition, impacting their future learning abilities and employment prospects.
• Gender Inequality: Low female workforce participation restricts the economic potential of nearly half the population.
• Stunting and Wasting: According to NFHS-5 (2019-21), 35.5% of children under five are stunted, impacting cognitive and physical development.
  

Policy Measures to transform demographic potential into a national asset

• Education System Reform: Revamping school education with critical thinking, digital literacy, and vocational training will prepare youth for the modern job market.
  For example: The National Education Policy (NEP) 2020 introduced vocational training from Class 6 to bridge the skill gap.
• Massive Skill Development Push: Expanding Skill India with mandatory industry internships and AI-driven learning modules will enhance employability.
• Incentivizing Job Creation: Offering tax breaks and subsidies to labor-intensive sectors like manufacturing and construction can generate millions of jobs.
  For example: The production-linked incentive (PLI) scheme for electronics manufacturing has succeeded in attracting a cumulative investment to the tune of Rs 10,213 crore till December 2024, leading to the creation of over 1.37 lakh direct jobs
• Boosting Women’s Participation: Policies like maternity benefits, workplace safety, and flexible work arrangements can encourage more women into the workforce.
  For example: The Maternity Benefit (Amendment) Act 2017 increased paid maternity leave from 12 to 26 weeks, improving workforce retention.
• Decentralized Economic Growth: Developing Tier-2 and Tier-3 cities into industrial and tech hubs will reduce migration stress and create localized job opportunities.
  

India’s demographic dividend can be a demographic disaster without urgent reforms. Skill development, quality education, labor reforms, and innovation-driven entrepreneurship must be prioritized. Strengthening healthcare, social security, and gender inclusivity will ensure sustainable growth. Policies like PMKVY, ASPIRE, and NEP 2020 should be expanded to maximize this fleeting opportunity.

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