Tapping demographic dividend vital to India economy

India's population dynamics are favorable.

Should India wish to further boost economic growth, it must do so by tapping the demographic dividend.

According to a researh note from DBS Bank Ltd., India’s demographic dividend is amongst the key strengths of the economy. While Japan, Taiwan, and few Western countries grapple with an ageing population, India's population dynamics remain favorable.

World Bank data show that the working age group (15-64 years) make up close to two-thirds of the overall population.

Against this backdrop, the Indian government faces the challenge of tapping the sizeable working age group and focus on skill development of the aspirants, to provide additional boost to growth. 

Here's more from DBS Bank Ltd.:

The recent budget saw higher allocation towards education and establishment of additional higher institutes of learning.

Plans are to make one of the key employment schemes, MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) more meaningful by directing focus to asset creating and productive projects.

The central government's expenditure towards social services (including health, education, etc.) stood at 17% of total spending in FY14.

Tapping the demographic advantage will be no easy feat. There is need to jump-start job creation, aided by an improvement in the business climate and focus on labour-intensive manufacturing and service sectors.

With the existing cities under strain to absorb the movement of labour from the rural to the urban areas, geographical development needs to be more balanced.

There has also been stress on review of the existing labour laws to provide flexibility to the public and private sector players, with infrastructure investment crucial to enable businesses to expand operations.

In sum, coordination is required between the centre and state governments for a concerted effort on skill development and job creation.

Improvement here will be graduatl and undertaken as a multi-year agenda.