General awareness on current topics is essential as not only you will be getting questions on GK in various MBA entrance exams but it will be useful for Essay writing test and WAT also.
Today, you will read General Awareness Topic: “India : The Youngest Nation by 2020”
Demographic dividend refers to a period – usually 20 to 30 years – when a greater proportion of people are young and in the working age-group.
This cuts spending on dependants, spurring economic growth. India is set to have one of the youngest populations in the world by 2020, as well as a growing aspirational and lower middle class which is supposed to important contributor in growth and the demand factor.
While most of the countries of developed western world as well as many of the developing countries like China are likely to face shortage of working population in coming decades, India will have the youngest population, thanks to the failure to successfully implement the Family Planning Programme.
All over the developed world, population is shrinking and aging at a rapid pace, be it Europe, the US or Japan. The impact is possibly the worst in Japan where over 22.5 per cent of the population is over the age of 65, which is expected to increase to 40 per cent by 2055.
It is estimated that the Japanese population of 128 million could come down to 96 million by 2050 and 64 million by 2100. In 2007, there were 29,000 few Japanese than a year before. Their economic growth has been affected in the last decade and the prospects for the next two decades are bleak as the working age population continues to decline.
By 2020, the average Indian will be only 29 years old, compared to 37 years in China and US; 45 years in West Europe; and 48 years in Japan. In effect, in eight years, workers elsewhere would have crossed the prime of their working lives, inching towards retirement with claims on a working and youthful shrinking population
India can count several advantages here. While India would be going through the most exciting phase of economic development ever over the next 20 years, with the potential to grow its economy by over four times.
The dependency ratio in India has fallen to 56 per cent in 2010 against 65 per cent a decade ago, and is expected to go below 50 per cent over the next decade. This would lead to higher savings underpinning investments and rapid economic growth. In contrast, China’s dependency ratio is expected to increase from 39 per cent to 45 per cent over the next decade, suggesting that the high economic growth in China has actually peaked out.
Domestic consumption on the back of favourable demographics is the key driver behind India’s growth story, with around 80 per cent of India’s GDP being consumed within the country. Some of the sectors that can benefit out of this consumer boom would be FMCG, pharmaceuticals, automobiles, banking and finance, etc. These sectors will show higher than average sectoral growth rates.
Recently, the International Monetary Fund's ‘Asia Pacific regional Economic Outlook for 2012' cited in media reports suggests that the dividend can add about 2 per cent to the annual rate of economic growth with the right policy mix. That seething mass of youthful energy has to be harnessed and if done well, India's GDP could witness a sizable leap. Given the slipping numbers, with GDP forecast at around 6 per cent, the demographic dividend could be a panacea for the country’s falling growth.
However, there are many challenges in harnessing the potential of demographic dividend. To achieve a demographic dividend from the surge in numbers of the working-age population, India must cope with a number of socio-economic challenges the same demographic indicators are exacerbating. These challenges may require Indian policy-makers to make trade-offs regarding the resources they dedicate to maintaining internal security versus projecting power beyond India’s periphery.
By far, the biggest challenge lies in educating the increased numbers of youth. The best news that came from the 2011 census data was the increase in the literacy rate to 74 per cent, up 10 percentage points from 2001. Still, if the coming waves of Indian youth are not educated adequately, they will be unprepared to enter the work force. They also will be more likely to contribute to social tensions and become a drag on the economy, rather than part of the expected economic dividend.
Another challenge India must prepare for is urbanisation. Three out of 10 of the world’s largest cities are in India. Sprawling, impoverished cities are more vulnerable to gang activity, crime, and terrorist recruitment. India must prioritise municipal planning and strong local governance and unburden city planners from state-level bureaucracy.
Perhaps the most disheartening news from the 2001 Census is the widening gender gap. Despite economic development and social change in India, the preference for sons remains high — there are 914 girls for every 1,000 boys. If the number of Indian females continues to decrease relative to the number of Indian males, this could become a significant source of social instability. The problem manifests itself when marriage rates decline and unmarried men have trouble finding jobs.
Overall, if India plays its economic and educational cards right, India’s youthful population will serve as an asset in fulfilling its geopolitical ambitions and contribute to its ability to project power beyond the Indian periphery. And if it is not effectively utilized, demographic dividend can turn into a demographic nightmare.
Update your GK and read General Awareness Topics at MBA Rendezvous