Poor states to benefit from India's rising workforce: IMF

Feb 27 2011, 15:48 IST
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SummaryIndia's swelling working age population is expected to increase the income of poor states as well, according to an IMF working paper.

India's swelling working age population is expected to increase the income of poor states as well as boost the overall growth, according to an IMF working paper.

Working population is generally defined as those between the age group of 15 to 64 years.

"... going forward, it is the poorest Indian states that stand to gain the most from the forthcoming demographic transition, since they are the ones that have so far lagged behind in both transition and in income growth," the recently released paper by Shekhar Aiyar and Ashoka Mody said.

One of the most-populated countries in the world, India has well over 1.1 billion people.

As per estimates, the world population is to grow by 2.4 billion people. About a quarter of the projected increase in the global population aged 15-64 years between 2010 and 2040 is expected to be in India.

The trend of increasing number of working age population, also termed as "demographic dividend", is mainly due to declining infant mortality rates as well as falling fertility rates.

"The working-age ratio in the country is set to rise from about 64 per cent currently to 69 per cent in 2040, reflecting the addition of just over 300 million working-age adults.

"This would make IndiaŅby an order of magnitude the largest single positive contributor to the global workforce over the next three decades," the paper noted.

According to the paper, whose views need not necessarily represent that of IMF, the demographic dividend factor would bolster India's per capita income in the coming decades.

"The demographic dividend is projected to peak over the next two decades -- adding about two percentage points to the annual per capita income growth over the period," it noted.

One percentage point is 100 basis points.

"... the bulk of the remaining demographic transition will be concentrated in lagging states, thus raising the prospect of substantial income convergence among rich and poor states," the paper said.

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