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Utilising Demographic Dividend

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  29-Dec-2023 | Priyanka Todariya

India stands at the precipice of a transformative era, armed with a formidable demographic dividend. Projections indicate an increase of 240 million people over the next 25 years, with far-reaching and diverse implications arising from this population growth. As the nation grapples with the challenges and opportunities presented by this demographic shift, a strategic approach becomes imperative to harness the potential for sustainable economic growth.

India stepped into the demographic dividend window in 2005-06, with this phase expected to extend until 2055-56. The Economic Survey 2018-19 forecasts the demographic dividend's peak around 2041, coinciding with the working-age population (15-64 years) reaching 59%. While presenting a significant opportunity for economic growth, realising this potential depends on addressing various challenges.

The Significance of India’s Demographic Dividend

Economic Growth and Consumer Market Expansion

Over the last decade, India's consumer market has evolved from the tenth-largest market globally to the fourth-largest. By 2047, India's consumer market has the potential to reach $18.5 trillion, trailing only the US and China. This growth, fueled by an expanding population, underscores the need for strategic planning to ensure sustainable development.

Labour Market Pressures

Population growth exerts immense pressure on the labour market. By 2047, India is projected to have 1.1 billion people in the working-age group (15-64), emphasising the need for job creation to absorb this escalating workforce.

Current Government Initiatives to Utilise Demographic Dividend

One notable initiative is the Skill India mission, aimed at enhancing the employability of the youth by providing them with relevant skills and training.

The National Skill Development Corporation (NSDC) and various sector skill councils collaborate to bridge the gap between demand and supply in the job market.

Additionally, programs like Make in India and Startup India focus on promoting entrepreneurship and boosting job creation.

The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is another flagship scheme that emphasises skill development, enabling individuals to contribute effectively to the workforce.

Challenges Associated with India’s Demographic Dividend

  • Low Female Labor Force Participation: India faces a substantial challenge with low female labour force participation rates, standing at 22%, compared to an average of 70% in the US, China, and the UK.
    • What is essential to redress historical inequities is the creation of at least 43 million jobs for females in the next decade.
  • High Dropout Rates and Disparities: While primary school attendance in India exceeds 95%, issues such as poor infrastructure, malnutrition, and a scarcity of trained teachers contribute to high dropout rates.
    • Additionally, the demographic dividend window varies across states, with some already experiencing an ageing population, necessitating tailored policies.
  • Jobless Growth Concerns: Deindustrialisation, deglobalisation, and Industry 4.0 raise concerns about jobless growth. The Economic Survey 2019 highlights a gap between the projected increase in the working-age population and available jobs, emphasising the need for innovative solutions to ensure employment opportunities.

Possible Solutions

To fully harness the demographic dividend, India can draw valuable lessons from the experiences of countries such as Singapore, Taiwan, and South Korea, which have successfully leveraged strategic policies for remarkable economic growth.

One critical lesson is conducting an Updated National Transfer Accounts (NTA) Assessment. India should undertake a comprehensive NTA assessment to understand consumption patterns, and state-specific NTAs should be calculated annually, ranking states based on investments in youth. This approach will provide insights into regional variations, enabling targeted policies.

Investing in Children and Adolescents is another key strategy. India must allocate resources to enhance nutrition and learning during early childhood. Emulating South Korea's model of transitioning from secondary education to universal skilling and entrepreneurship is crucial. This shift ensures that the youth are equipped with the necessary skills for a rapidly evolving job market.

Health Investments play a pivotal role in capitalising on the demographic dividend. India needs to increase health spending, ensuring that it keeps pace with economic growth. Policies promoting health during the demographic dividend are essential for creating a healthy and productive workforce. Improved finance and better health facilities are imperative components of this strategy.

Ensuring universal access to high-quality primary education and basic healthcare, particularly Reproductive Healthcare Services, is essential. Closing the disparity in unmet family planning needs is crucial for optimizing the benefits of the demographic dividend. By prioritizing these services, India can enhance the overall well-being and productivity of its population.

Education for Gender Equality is paramount. India must reverse the trend where boys are more likely to be enrolled in secondary and tertiary schools than girls. Learning from the experiences of Japan, South Korea, and Indonesia can guide this transformation, fostering a more inclusive and empowered society.

Increasing Female Workforce Participation is a critical component of demographic dividend utilization. Strategic measures such as compulsory gender budgeting, increased childcare benefits, and tax incentives for part-time work, as observed in South Korea, can serve as effective models.

Addressing State Diversity is essential, recognizing that India's demographic transition varies among states. A nuanced approach is required, with southern states serving as advanced models. Collaboration between states can act as a catalyst for demographic transition, with the north-central region potentially serving as a reservoir of India's workforce.

Leveraging Public-Private Partnerships (PPPs) is crucial for efficient resource mobilization. Successful PPP models from other countries can provide valuable insights into infrastructure development and job creation. Collaborative efforts between the public and private sectors can amplify the impact of demographic dividend utilization policies.

Establishing a robust Monitoring and Evaluation Mechanism is the final pillar. This mechanism will track the effectiveness of demographic dividend utilization policies in real time. Adaptive governance, based on continuous data and feedback, is essential for ensuring that strategies evolve and improve over time. By implementing these lessons and solutions, India can navigate the challenges and unlock the full potential of its demographic dividend, positioning itself as a global economic powerhouse.

Important Role of the Youth

The youth play a pivotal role in harnessing the demographic dividend, as they constitute a significant portion of the working-age population. Their energy, innovation, and adaptability can drive economic growth and social development.

  • Skill Development: Youth should actively engage in skill development programs to enhance their employability and contribute to emerging industries. This includes vocational training, apprenticeships, and participation in Massive Open Online Courses (MOOCs).
    • Prioritising education is crucial. Youth should pursue higher education and continuously update their skills to align with the evolving job market.
  • Startups and Entrepreneurship: The youth can drive economic growth by actively participating in entrepreneurship.
    • Creating a supportive ecosystem for startups, seeking mentorship, and navigating streamlined regulatory procedures can help them establish and grow successful businesses.
  • Innovation: Embracing innovation and technology is key. Youth involvement in research and development, particularly in areas like quantum technology, blockchain, and the Internet of Things (IoT), can contribute to economic advancement.
  • Environmental Awareness: Youth can champion environmental sustainability by raising awareness about climate change, promoting eco-friendly practices, and actively participating in conservation initiatives.
    • Their involvement can help mitigate the environmental impact of population growth.
  • Community Service: Engaging in community service and social initiatives helps address local challenges and contributes to the overall development of society. Youth-led projects can have a significant impact on education, healthcare, and infrastructure at the community level.
  • Participatory Governance: Actively participating in the democratic process and governance ensures that the youth's perspectives and concerns are represented.
    • Involvement in local and national decision-making processes is crucial for shaping policies that affect their future.


Youth is going to play an important role in India's efforts to make the most of the demographic dividend. They're not just getting benefits from it; they're also the ones shaping how it turns out. Their skills, enthusiasm, and strong commitment can drive India toward growth that lasts and includes everyone. If they focus on developing their skills, starting new businesses, being innovative, pushing for fairness between genders, and getting involved in development plans, young people can change the story of the demographic dividend. With smart planning and teamwork, India can use its demographic advantage fully, not just to meet the needs of its growing population but also to set the scene for a successful and lively future for the entire nation.