“The flowing current moves on and never will return to its source again”

                                                                                                                                                                                              Chinese proverb

“ Samoy Gele Sadhon Hobena”

                                                                     Lalon Fakir

On the loom of time, the demographic structures of the world and its different societies have been changing continuously. The demographic structure of society changes from time to time. The movement of society from high birth rate and high death rate to low birth rate and low death rate is known as the demographic transition. During the demographic transition, a phase occurs when the growth of the working-age population surpasses the growth of the non-working-age population. This phase is termed as the window of demographic opportunity. The bonus population in the working age group is termed as the demographic dividend. The demographic dividend is a consequence of fertility decline. Demographic transition starts with the decline in mortality. After the mortality decline, a decline in fertility also takes place. Then these two rates equalize after a phase of time. The duration of this phase depends on many social, economic, political and demographic conditions and on the occurrence of natural calamities and the outbreak of disease. With the onset of fertility decline, the number of children (the number of dependants) also reduces. As a result, more resources are released in society. These extra resources help to improve the quality of population and quality of life successfully. Also, the bonus population of working age group is expected to yield economic benefits by enriching the workforce. However, the demographic dividend is a gift of time and it does not last forever. It appears with the decline in fertility and dissipates with the stabilization of birth and death rate. 

What is “Demographic Dividend”?

Speaking in demographic language, demographic transition is the movement of society from high birth rate and high death rate to low birth rate and low death rate in a particular region. This transition is achieved over a long period of time. During the demographic transition, for a certain period of time, the growth of working-age population (Population in the age-group 15-60 years) remains higher than the growth of non-working age population (Population below 15 years and above 60 years of age). As a result, the overall proportion of the working age population remains higher than the proportion of the non-working age population. This so-called “window of opportunity” opens up with a decline in the birth rate and ends with equalisation of birth rate to the death rate. During this period the economy or society experiences a boom in the working age population. This increase in the working age population due to demographic transition is famously known as the “Demographic Dividend”. The period sustaining the demographic dividend is termed as the “window of demographic opportunity”. Now, if this huge population is employed properly it will usher in magnificent economic prosperity in the country.

This demographic dividend, however, does not last forever and the window of opportunity is limited. With the advancement of time, the age distribution rearranges itself. The large adult population that had once contributed vigorously to the workforce now moves into the older, less-productive age brackets. This is followed by the birth of smaller cohorts due to the decline in fertility. With this, the dependency ratio now rises. This infuses a need to care for the elderly population while marking a sloth in the need to take care of the younger people.

While, initially when demographic pressures are eased with a fertility dive, some countries find themselves in a better position to take advantage of that than the others. Some nations will act to capitalize upon the released resources and use them effectively while others might not. Then, in time, when the window of opportunity closes, those who had not taken advantage of the demographic dividend shall face renewed pressures and will find themselves in a position that is weaker than before.

The window of demographic opportunity: –

“Demography is Destiny”

-Auguste Comte, French Sociologist (1798-1857)

So demographic window is important for a country’s development. It is understood. But how much important is it? Will ignoring the Demographic window deal a major blow to a country’s growth prospects? Let’s find out.

The demographic window is defined to be that period in a nation’s demographic timeline when the proportion of the working age group population is particularly prominent in comparison to the proportion to the non-working age population. This happens when the demographic layout of a population becomes increasingly younger and the percentage of people able to work reaches a peak.

Typically, the demographic window of opportunity lasts for 30–40 years depending upon the country where it is occurring. Because of the strong link between the level of fertility and age structure of the population, the timing and duration of this period are closely associated with that of fertility decline. Speaking more clearly, when birth rates fall, the age pyramid first shrinks due to the occurrence of lower proportions of young population (under 15 years) and the dependency ratio decreases. This is something that is happening (or has happened) in various parts of East Asia over several decades. After a few decades, a low fertility level causes the population to grow older and the sizeable proportion of elderly people inflates. This gives rise to a high dependency ratio, something that is observed in present-day Europe.

The exact nooks behind the definition of the “demographic window of opportunity” may vary. The UN Population Department has defined it as “a period when the proportion of children and youth under 15 years falls below 30 per cent and the proportion of people 65 years and older is still below 15 per cent”. The demographic window for Europe began in 1950 and saw its end in 2000. For China, it started in 1990 and is expected to continue until 2025. For our own nation India, this demographic window has opened up since the late eighties and is perceived to continue up to the mid-period of the current century.Also, the African countries are not expected to enter this demographic window till 2045 or after that. Societies who have entered the demographic window have smaller dependency ratio (ratio of dependents to working-age population).Thus, these societies acquire the demographic potential for high economic growth because favourable figures of dependency ratio will boost their savings and investments in human capital. But in reality, this “demographic bonus” can only remain as much as a distant dream. As cited in the quote above, various problems including low work participation rate (among women) or rampant unemployment will bog down the incendiary advantage of the “window of opportunity”.

An example – East Asian Miracle: –

The “East Asian Miracle” famously denotes the dramatic growth in the economy experienced by eight East Asian nations between the 1960s and1990s. During this period, 8 East Asian countries-Japan, South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia and Indonesia experienced high levels of economic prosperity and achieved spectacular improvement in terms of their quality of life. This dramatic change in the quality of life accompanied by miraculous economic makeover had virtually abolished the dire poverty in these nations, with the economic indicators surpassing previous predictions. There have been many theories and scholastic debates seeking to explain such an impressive growth story.However, unfortunately, as a common saying goes that three economists explain a thing in five different ways, no explicit explanation for the same was arrived at. Generally, it was accepted that by the end of the 1960s a huge impetuswas received in the growth and accumulation of physical and human capital because of policies that were aimed to usher in rapid industrialization. This was accelerated further by the advent of advanced technologies.

Besides the economic angle, there have also been several attempts at a demographic explanation of this miraculous growth. The pioneering work in this area carried out by Bloom et al (1998) explained the events in the context of a demographic transition. They found that the change in the components of demographic transition was “more dramatic in East Asia during the twentieth century than in any other region or historical period”. Along with economic components, they introduced several demographic variables in their analysis, and concluded that it was a demographic transition that had contributed substantially to East Asia’s so-called“economic miracle”. In other words, these countries had been able to reap the benefits of the transition in age structure that they were subjected to. The increasing working-age population was effectively converted to human capital, which was subsequently absorbed by the working sector. Thus, their share in the total population had grown faster than the share of the dependent population. The demographic dividend was like a veritable bonanza and these countries were able to efficiently harvest the dividend provided by this opportunity. They also noted that the demographic dividend moved on like tidal waves and it was only a matter of time before it hit South-East and South Asia. The South-East Asian countries like Indonesia, Thailand and Malaysia have experienced this transition in the recent past; presently it is dominant in South Asia and is expected to be experienced by Africa in the near future.

The window of demographic opportunity in India:

India is by far, the biggest nation and dominant economy in South Asia, and is presently passing through a critical phase of demographic transition. The demographic dividend is expected to reach its peak during the period from 2020 to 2030 and is predicted to last up to the late sixties. Given that India is the second most populous nation in the world, the synergicperformance of its education system(which is the third largest in the world) will be a vital factor for progress. In such a scenario, an attempt has been made, in this study, to critically analyzethe nooks and crooks of the demographic dividend and the nation’sconsequent educationalachievements.

The above lineshowcasesthe importance of demographic dividend andhow its proper utilisation can be beneficial for a developing nation like India. Our country is in the midst of a major demographic transition. This transition had been initialised in the 1960s with a jump in fertility decline and will continue towards the end of 2050s when fertility and mortality stabilize. A simple figure will illustrate this more clearly.According to a report from The Diplomat, about a quarter of the projected increase in the global population aged 15–64 years between 2010 and 2040 will occur in India. The ratio of working-age to the non-working-age population in the country is set to rise from about 64% in 2010 to 69% in 2040, reflecting the addition of over 300 million working-age adults! This would make India—by an order of magnitude—the largest single positive contributor to the global workforce over the next three decades. Another estimate by Ian Pool says that by the year 2020, 136 million Indian youngsters will enter the global workforce. Compared to this enormous number which shall account for 17% of the total global workforce our neighbouring country China shallbe able to add only 23 million people and the USA will increase its working-age population by 11 million during the same period. India’s total population (presently a little over 1.35 billion) is projected to grow by as much as the current total population of the USA.

From the report provided by the UN technical group on population projection striking changes can be observed in the population and the age structural composition of India. Comparing two points of time it is seen that the base of India’s population pyramid shrinks in 2026 and a gigantic amount of it is concentrated on the middle age-groups. Thus,as a resultofthis,the dependency ratio will be falling significantly. In this falling dependency ratio, young dependency will contribute a lion’s share in the falling trend. Then with the falling dependency ratio more resources will be released which can be directed for investment in other crucial areas. India’s population pyramid for 2026 shows an enormous concentration of population in theworkingage groups. If properly trained this population will contribute the largest share in global labour force supply and can control the global labour market.

Does this hold good for India?  

“One would have thought that it was even more necessary to limit population than its property. The neglect of this subject, which in the existing state is so common, is a never-failing cause of poverty among the citizens; and poverty is the cause of both revolution and crime. ”

-Aristotle, Greek philosopher (384-322 BC)

Historical records suggest that the nations that benefitted by age structure transition were mainly pre-industrialized countries. During the past fifty years, the East Asian tigers (a term used to refer to countries Hong Kong, Singapore, South Korea and Taiwan) experienced a very fast rate of growthin the industrial (secondary) and service (tertiary) sectors. Upon comparison of the sectoral composition of gross domestic product these countries, a growing contribution of the tertiary sector and a steep decline in the contribution of the agricultural (primary) sector has been observed. They have faced at an average 5% rate of growth in the service and industrial sector. Countries like Singapore (-4.31), Hong-Kong (-3.71) have shown negative growth in the contribution of their primary sector.

Coming to the situation of our motherland, the Indian economy is still agricultural in nature. Though presently the contribution of the agricultural sector has been found to be declining but till date proportion of population dependent on agriculture is very high. The primary sector had a contribution of 55% to GDP in 1950-51 which reduced to 16% in 2014-15. The contribution of the secondary sector has increased from 15% in 1950-51 to 32% in 2014-15. The share of tertiary sector has increased from 29% in 1950-51 to 52% in 2014-15. Another factor of considerable importance is the population size. India is the second most populous country in the world after China. But the countries mentioned above have had a very small population compared to India. The homogeneity in the population composition of these countries is well versed. On the contrary, the population composition of India is highly heterogeneous in nature. Anthropological, sociological, linguistic, cultural, religious and economic diversity in the population composition of India brings in the idiosyncratic feature of a sub-continent. The level of educational attainment is also markedly varying. The average mean years of schooling had been almost 10 years in the previously mentioned countries compared to an average of 4.5 years in India. So it is expected that the working mechanism of demographic transition would be different in India. Our country seems to be moving towards the transition slowly but imminently. The theories that have proved their mettle in Western countries need to be applicable in the Indian context. These theories have to be meticulously modified to have a positive effect in India. The policy of progressing slowly but steadily had and will work well for India.

Changing Age Structure of the Indian population in figures (1950-2100)

Source: United Nations (2010)

Quantitative Measures of Demographic dividend:-

There are many measures of the demographic dividend (DD). In the present research, Age-dependency-ratio has been considered as a simple measure of the demographic dividend.

Age-dependency-ratio is defined as:

The above measure gives the number of dependent people per 100 persons in a given population.

In literature and empirical research, it is widely accepted that the presence of demographic dividend is indicated by the proportion of the working age population being more than or equal to 60%.

Let us consider a population of 100 units. Thus for the demographic dividend to occur the proportion of working-age population should be 60% or more. Thus the proportion of non-working-age population should be at most 40% or less. Then the value of Age-dependency-ratio should be,

So the presence of demographic dividend is indicated by an age dependency ratio less than or equal to 66%.

Classification of Age dependency ratio:

As said earlier, the presence of demographic dividend is indicated by the share of the working-age population being more than or equal to 60%. A 60% share of the working-age population implies that the ADR should be equal to or less than 66%.  So in the present research, the presence of demographic dividend is indicated by an ADR value less than or equal to 66%. Based on this value and on the mean and standard deviation the ADR has been classified into four categories. ADR below 55% is low-ADR, between the ranges, 55.01% to 66% is the low-medium ADR, and between66.01%-75% itis medium ADR and ADR above 75% denotes a high dependency ratio.

Age dependency ratio in India (ADR):-

In India, the average age dependency ratio has declined from 77.18 in 2001 to 67.09 in 2011. The lowest ADR was found in Daman for both Census 2001 and 2011. ADR in Daman fell from 38.6 (in 2001) to 32.1 (in 2011). The West-Khasi Hills district of Meghalaya (107.2) had the highest ADR in the year 2001. In 2011, the Mewat district of Haryana (111.6) had the highest ADR among all the then 640 districts of India.

Figure 2: Age dependency among the Indian population in Maps (District level)

Areas with a Low ADR: There were 28 (5%) districts in 2001 which had a low-dependency ratio. The number of districts has increased to 129 (20%) in 2011. The population share of these districts has increased from 6% (2001) to 25% (2011). There was a rise of 15% in the number of districts from 2001 to 2011. Althoughthere was a19% rise inthe populationsize during the same period.  The districts in this low ADR category were mainly from the states like Tamil Nadu (11) and Kerala (4) in 2001. In 2011 the states which contributed a major part in this group were Tamil Nadu (26), Karnataka (15), Andhra Pradesh (9), Maharashtra (10), WB (8), and Delhi (8).

Areas with a Low-Medium ADR: There were 120 (20%) districts in the category Low-medium in 2001 and it increased to 213 (33%) district in 2011. The population shares of these districts have increased from 24% in 2001 to 31% in 2011. There was a 13% increase in the number of districts and 7% increase in the population size. The major contributors in this category were the southern and western states like Tamil Nadu (19), Kerala (9), Karnataka (14), Andhra Pradesh (11) and Gujarat (12). There was a change in the situation and many states have entered this group in the year 2011. The main contributors in 2011 were Kerala (10), Karnataka (9), Andhra Pradesh (14), Maharashtra (14), Gujarat (15), Madhya Pradesh (14), Chhattisgarh (10) and Orissa (16).

Areas with an Upper-Medium ADR: In this category, there were 127 (21%) districts in 2001 which decreased to 112 (18%) districts in 2011. The population shares of these districts have decreased from 20% in 2001 to 15% in 2011. There was a 3% reduction in the number of districts followed by a 5% decline in the population share. Almost every state had districts which fall in this category in both the Census years. The major contributors in 2001 were Maharashtra (12), Orissa (18), and Punjab (13). In 2011 the main contributors were Maharashtra (11), Madhya Pradesh (18), Uttar Pradesh (13) and Rajasthan (11). The noticeable thing was that there were 23 states that had districts in this category but the variation was reduced in 2011 and only 13 states contributed to this group.

Areas with a High ADR:  There were 318 (54%) districts in this category in 2001 which fell to 186 (29%) districts in 2011. The population shares of these districts have also shown a decrease from 50% in 2001 to 29% in 2011. There was a25% decrease in the district count followed by a 21% decrease in the population share. The major contributors in this group in 2001 were Uttar Pradesh (68), Bihar (37), Madhya Pradesh (40)and Rajasthan (31). This scenario remained the same in 2011wherethe major contributing states were Uttar Pradesh (53), Bihar (38), Madhya Pradesh (18) and Jharkhand (18). Though the amount of variation too got reduced here like the previous group the regional pattern did remain the same over the decade.

Overall, the above results suggest that there exists a wide variation in the ADR in India. The whole country is not experiencing the same quality of transition at the same time. Southern and western states experienced a decline in the dependency ratio. Even few districts from the middle, central and eastern part experienced low dependency ratio. But the major part of the northern, central, east and north-eastern India are yet to experience a significant decline in the dependency ratio. In the present,most of the districts in these regions continue to have a medium-high or a high dependency ratio.

Table 1: State wise distribution of districts according to age dependency ratio and population composition (percentage %) for 2011 and 2001 (# districts)

The number in the parenthesis shows the number of districts in the respective category and the figure is the population share of the districts in the category to the respective states total population share

Workforce and Work participation: The main problem in India is that the growing labour force is not converting into labour force properly. The growth in employment generation has been lower than the growth of the workforce. As a result, the size and proportion of unemployed worker have also increased. The proportion of worker among the working age population (15-59) has decreased from 64% in 2001 to 61% in 2011. The number of educated unemployed has also increased. The proportion worker among the literate population has decreased from 44.3% in 2001 to 44% in 2011.

Table 2:- Work participation rate for sub-groups of ADR for 2001 and 2011

Conclusion:  The size of the workforce in India is increasing. But due to the stagnant nature of work participation, the workforce is not getting converted into a labour force. In a situationwhere on one hand the level of educational attainment has increased, on the other hand, the proportions of unemployed among educated people have also shown an increase. The southern states of India have already experienced this age-structural transition. They werealso able to reap the benefits of this transition. The future benefits of India’s demographic dividend will depend upon the capability of the northern states to fully utilize the growing workforce and to learn from the experience of the southern states. These states are sometimes referred to as laggard states as they are lagging far behind in terms of socio-economic and demographic advancement. Special focus should be givento infrastructural development and to theproper training andskilldevelopment of the growing workforce. Else, our country’s future shall be a fruitless one and our gracious dream of becoming a developing nation would not become a reality but will remain only a wish of the distant generations to come.

Key Problems and Policy recommendations for reaping demographic dividend:-

  1. Our study shows that the size of the workforce in India is increasing but the workforce is not being fully converted into the labour force. Although, the age dependency ratio in India is decreasing the Economic Dependency Ratio (EDR)is not decreasing at the same pace. It has also been found that the EDR is almost two and a half times higher than the ADR. This clearly points out that the basic problem in India is the lack of employment opportunities. The government should realise that the generation of employment is the need of the hour. In recent times programs like NREGA (National Rural Employment Guarantee Scheme) turned out to be very effective in employment generation. In order to reap the benefits of the window of demographic opportunity,thegovernment should launch such large-scale projects that can provide jobs for the growing working-age population.
  • The high difference between EDR and ADR may also be because a large portion of the working-age population especially,the women are not joining the workforce. It has been found that theWork Participation Rate (WPR) among women is relatively lower in comparison to the men. In the urban areas, WPR among women is lower than that of the rural areas. So policies should be designed to effectively absorb the working-age females into the workforce. Attempts should be made to bring more women into the workforce. Efforts should be made by the government to create jobs that are favourable for the female workforce.
  • Another problem is the huge difference in the wage rate between a male and a female worker. Many studies have shown that the wage rate for a female worker is lower than the wage rate of amale worker. This fact often proves to be discouraging for the prospective female workers to join the workforce. Thus, policies should also be made in this respect to bring equality in remuneration and to abolish the male-female wage differential in the job market.
  • Our results also show that on one hand where the educational quality of worker has increased in recent times, on the otherhand, the number of educated but unemployed persons have also increased. The government should address this problem urgently. The WPR in India has increased with the increase in the level of education but the problem is that the rate of change in WPR has been showing a downward trend recently. This is a huge loss for the economy. Factors responsible for this misadventure may be the traditional course structure in various educational institutions, inappropriate curriculum, and lack of technical skills. Course and curriculum should be made up to date, progressive and more job-oriented. It should be designed in a way such thatit increases the employability of the workers.
  • Of late the tertiary or service sector has grown up in India at a very rapid pace. Various conservative theories of development state that a traditional society at first transforms itself from an agricultural-based society, into an industrial society and finally to a tertiary sector based society. The Indian experience in this respect has been that the service sector has grown faster than the industrial sector. The tertiary sector’s contribution to national GDP has increased rapidly and as a result, the demand for a worker in this sector has increased successively. But working in this sector requires sound technical knowledge and use of soft skills. In India, the level of educational attainment is much lower compared to that of the developed countries. The illiteracy rate is still high especially among the rural and the marginalized people with women laggingfarther behind. The proportion of the marginal worker is quite high, which in turn creates the problem of pseudo-employment or partial employment. Developing education is a matter of long run and it depends upon many other circumstances. Launching of vocational courses on job training andshort-term technical courses might help in increasing the skills of the illiterate, little educated and low skill workers in a relatively short period.
  • Mean years of schooling (MSY) in India is very low especially among the rural and the marginalised people. It is calculated to be only 4.5 years. One significant reason for this is the high prevalence of school dropout among the young and adolescent population. Average mean years of schooling (MSY) among the literate female is only 6.35 years and the figure further reduces to a shameful 3 years among all women. Only 5-7% of the total population are able to enterthe phase of attaining tertiary education. Dropout among females is hugeat theprimary, puberty and PhD level.The government should focus on appropriate, area-specific educational policies that can abolish the vicious plagues of dropout, child-labour and early marriage. Schemes and initiatives should be la launched that can increase the enrolment rate and the transition rate. That would further lead to an increase in the mean years of schooling. Conditional Cash Transferlike ‘Kanyashree’ in West Bengal has been found to be very effective in reducing the school dropout rate among teenage girls. It has also dealt a major blow tothe practiceof early marriage among girls.
  • Lack of School infrastructure/computer availability/ proper sanitary facilities for girls: In India, the proportion of the population in the age group 0-14 is quite high, especially in the laggard states. Southern states have already experienced their demographic transition and northern states are yet to experience it. However, these laggard states have a very high proportion of the base population (0-14) and a huge number of school-going (6-19) populations. The number of schools and the school-population ratio is quite low. The demand for school infrastructure is quite high and the availability of schools is comparatively low. This scarcity of school further facilitatesa huge number of childrento remain uneducated and to drop out of school at the adolescent age. Girls in the rural areas are the worst victim. This makes investing in school infrastructure and increasing the availability of schools to meet up the growing demand for school infrastructure inevitable.This step is necessary to prepare today’s children for a prosperous future. The pupil-teacher ratio is also found to be very low in India. Increasing the number of teachers in schools is a crucial measure to improve the quality of schooling. It will also create an employment opportunity for the educated population. Other essential infrastructures like a table, chair, blackboard, computer and internet should also be provided in a proper quantity to improve the quality of schooling. Availability of proper sanitary facilities for girls inside the school periphery is an important determinant in reducingdropout at the puberty level. These measures will increase the school enrolment and the school completion rate simultaneously. Schemes like ‘Nirmal School’ may prove to be helpful for this purpose.
  • The investment in education by the government in the developing countries is very low. In the Indian sub-continent, the average spending on education is only 3% of GDP whereas the developed countries spend almost 7% of GDP in education. Only 3.8% of GDP has been spent on education in India. Education is not only a basic need it is also a fundamental right. Thus, expenditure on education should be increased to a sufficient extent. India is a lower-middle income country. Our analyses show that almost 25% of the households in the rural area do not have any consumer durable goods at their home. Herethe question of affordability of education simply becomes obsolete for these 25% households. For this population, education should be made costless and presence of other incentives should increase their participation in education. Emphasis should be given to schemes like ‘Mid-day meal’. Another problem is that many courses in higher education are very expensive which many timesbecome a financial catastrophe for the households. Thus, remedial measures are also required in this respect.Higher education should be made more affordable to bring it within the reach of the common mass. Thiswould encourage hugeparticipation from the youth.