Demographic Dividend

Notes

The demographic dividend (UNFPA) is the economic growth potential that results from a shift in a population's age structure, when the share of the working-age population (15-64) is larger than the share of dependants (children and the elderly). It lowers the dependency ratio and can raise savings, investment and output.

Demographic transition: Stage 1 high birth and death rates; Stage 2 falling death rate and rapid population growth; Stage 3 falling birth rate; Stage 4 low birth and death rates; Stage 5 ageing and possible decline.

India's position

India has the world's largest population (overtook China in 2023; about 1.4 billion); the median age is about 28 years; about two-thirds of the population is of working age; youth (15-29) are over a quarter.
Total Fertility Rate (TFR) has fallen to about 2.0 (NFHS-5, 2019-21), below the replacement level of 2.1.
The Economic Survey 2018-19 suggested that India's demographic window runs from about 2005-06 to 2055-56, peaking around 2041.
Regional variation: southern States (Kerala, Tamil Nadu) are ageing; northern and eastern States (Bihar, Uttar Pradesh) are still young, with higher fertility.

Conditions for reaping the dividend

Health and nutrition, education and skills (Skill India, PMKVY, NEP 2020), productive employment (especially in manufacturing and services), higher female labour force participation (about 40%), sound governance, and savings and investment.
If youth stay unemployed or unskilled, the dividend becomes a demographic burden or disaster.

Challenges: low employability and skill mismatch, jobless growth, a low female LFPR, malnutrition and poor learning outcomes, and rapidly ageing States.

Ageing and the "second dividend": the elderly (60+) are about 10% of the population and are projected to reach about 20% by 2050; savings and investment for old age can create a second demographic dividend.

Key Points

Demographic dividend: a larger working-age share than the dependent share.
India's window: about 2005-06 to 2055-56; the median age is about 28.
TFR is about 2.0, below replacement.
Needs jobs, skills, health and female participation.
Without jobs it turns into a burden.

MCQs

Q1. The demographic dividend arises when: (a) The population falls (b) The share of the working-age population is high relative to dependants (c) The birth rate rises (d) The elderly population grows fast Ans: (b).

Q2. The replacement level Total Fertility Rate is: (a) 1.5 (b) 2.1 (c) 2.5 (d) 3.0 Ans: (b).