Question

how does India benefit from demographic dividend​?

Answer 1

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 )

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.