India’s demographic dividend: opportunities and threats

Demographic transition creates a small window for countries to leverage their demographic dividend and leapfrog to a higher level of income-employment situation. This opportunity comes in the middle stage of demographic transition when the population pyramid shows signs of maturity and bulges in the middle, indicating a relatively larger share of youth or working age persons in total population, and hence a low dependency ratio. Consequently, countries can engage this human resource to augment its productive capacity. If sensibly utilised, this can raise per capita income level dramatically – pulling up the country to a substantially higher plane of living standards. However, the efforts will fall flat if this group of youth, on which so much depends, are not productive enough to enhance output significantly. Often questions are raised about the employability of the youth because of their inadequate education, training, and market ready skill and if the youth are not absorbed meaningfully into the workforce and are productive enough, this demographic dividend will turn into a demographic nightmare. Huge youth unemployment is the surest way to social tension, unrest, and unlawful activities. Hence to understand India’s readiness in this aspect we must look at the issue of education, skill formation and employment among youth in India. In this overview paper we find that current skill/training situation of youth in India is inadequate. Surplus and shortage coexists in the labour market indicating serious mismatch between supply and demand. There is an urgent need to relook at human resource development pattern in the country. It appears that a socioeconomic crisis is looming large and demographic opportunities will turn to threat unless intervened immediately.