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Today, you will read General Awareness Topic:
"Demographic Dividend: Advantage India"
Demographic Dividend refers to the rise in the rate of economic growth due to a rising share of working age people in a population. India's demographic dividend- i.e. its working-age (15-59 years) population, as of now, largely consists of youth (15-34 years), and as a result its economy has the potential to grow more quickly than that of many other countries including neighboring China. Technically, this usually occurs late in the demographic transition when the fertility rate falls and the youth dependency rate declines.
According to economists, the working population in India is set to rise considerably over the next decade or more. By 2020, the average Indian will be only 29 years of age, compared with 37 in China and the U.S., 45 in Western Europe, and 48 in Japan. Moreover, by 2030, India will have the youngest median age of 31.2 years, while China’s will be 42.5 years. Most major economies will see a decline of working age adults (20-64 years).
This means that India will see a significant rise in working age adults India's “dependency ratio,” that is the number of dependents to working people is low at 0.6, compared with the developed countries. That ratio is going to decline further with fertility rates continuing to fall. The demographic dividend is a window of opportunity in the development of a society or nation that opens up as fertility rates decline when faster rates of economic growth and human development are possible when combined with effective policies.
With the declining working age population in the other countries particularly developed countries, more jobs emanating from the developed countries will be outsourced and India can gain from it due to demographic dividend. According to International Monetary Fund (IMF), India’s continuing demographic dividend can add about 2 percent to the annual rate of economic growth, if harnessed properly.
An increase in the share of a country’s working-age (15–64 years) can generate faster economic growth. The working-age population is generally more productive and saves more increasing domestic resources for investment. The demographic dividend has been regarded as a key factor for economic growth.
However, there are many challenges which India needs to overcome to harness the opportunities created by demographic dividend. The growth in the working-age ratio is likely to be concentrated in some of India’s poorest states and that the demographic dividend will be fully realized only if India is able to create gainful employment opportunities for this working-age population.
Since most of the new jobs that will be created in the future will be highly skilled and lack of skill in Indian workforce is another serious challenge. There are serious problems with Indian higher education. These include a shortage of high quality faculty, poor incentive structures, lack of good regulation.
As bad as Indian higher education is, the worst problems are in primary education. After all, without a good foundation, subsequent education cannot happen easily and effectively. This is true even for vocational training, not just elite education for the advantaged and talented. At the primary level, there are also serious problems with health and nutrition that impact the effectiveness of education and the capacity for learning.
According to the Human Development Report (HDR) published by the United Nations Development Programme (UNDP), India is still in the medium human development category with countries like China, Sri Lanka, Thailand, Philippines, Egypt, Indonesia, South Africa, and even Vietnam has a better rank. Therefore health and education parameters need to be improved substantially to make the Indian workforce efficient and skilled.
Government has undertaken some measures to impart skills to the Indian workforce to reap the benefits of demographic dividends. Major challenge of skill development initiatives is also to address the needs of huge population by providing skills in order to make them employable and help them secure decent work.
Government established National Skill Development Corporation (NSDC) to contribute significantly (about 30 per cent) to the overall target of skilling / up skilling 500 million people in India by 2022, mainly by fostering private sector initiatives in skill development programmes and providing funding. Major objectives of NSDC are :
• Upgrade skills to international standards through significant industry involvement and develop necessary frameworks for standards, curriculum and quality assurance
• Enhance, support and coordinate private sector initiatives for skill development through appropriate Public-Private Partnership (PPP) models; strive for significant operational and financial involvement from the private sector
• Focus on underprivileged sections of society and backward regions of the country thereby enabling a move out of poverty; similarly, focus significantly on the unorganized or informal sector workforce.
• Play the role of a "market-maker" by bringing financing, particularly in sectors where market mechanisms are ineffective or missing
• Prioritize initiatives that can have a multiplier or catalytic effect as opposed to one-off impact.
Thus government seems serious about harnessing the potential of demographic dividend through development of skills. However, more holistic measures are needed to make the Indian work force not just economically competitive but also efficiently competitive.
Moreover, measures should have pan Indian presence and not just concentrated in metropolitan cities as most of the workforce is likely to come from the rural hinterland. It will not just help in increasing the economic development but will also help in curbing the regional and social inequalities.