Unreal demographic gains

India must calibrate policies to produce better employment outcomes.

population, united nations
The UN report grabbed headline space in India and elsewhere primarily for its estimate—rather, assumption—that India will replace China as the world's most populous nation by mid-2023. (IE)

The United Nations’ State of the World Population Report 2023 has reminded policymakers in all countries that building “demographic resilience” is integral to an equitable, prosperous, and sustainable future of the “human family.” The report’s seasoned approach to population concerns places human rights and freedom at the centre of the discourse. Avoidance of the generic term “mankind” for reference to the human race is in sync with the report’s evocation of all-round equity and gender equality, and its upholding of “sexual and reproductive justice,” with women at the centre. The relationship between “reproductive autonomy” and healthier lives needs no emphasis, says the report, and goes on to quote a survey in 66 countries, which suggested that 44% of partnered women were still unable to make decisions over healthcare, sex or contraception. Clearly, considerable distance remains to be travelled, before the goals are reached. The report draws the dichotomy in a world where “people are living longer, healthier lives and enjoying more rights and greater choices than ever before” but is also one that is beset with assorted challenges such as climate change, pandemics, (geopolitical) conflicts, mass displacement and economic uncertainty.

The UN report grabbed headline space in India and elsewhere primarily for its estimate—rather, assumption—that India will replace China as the world’s most populous nation by mid-2023. The two large Asian countries with population of 1.43 billion each, now account for over 30% of the world’s population that has just crossed 8 billion. Both countries are enviably youthful at this juncture (68-69% working-age people), when much of the developed world is either aged or ageing. But the similarities end there: China has reaped much of its demographic dividend already, having harnessed it right from its beginning in the 1970s and through the first decade of the current millennium. On the other hand, the bulk of India’s working-age people remained unemployable over the decades. For the country, the dividend or the incremental economic growth and prosperity from its youthful demography has been largely notional, even as its labour force surged, with annual addition of a staggering 10-15 million over the past two decades.

Also read: Citing troubled verticals, JP Morgan downgrades TechM, Mphasis

In fact, India had managed to reverse the declining trend in employment growth by the turn of the millennium, thanks to higher economic growth; yet the relentless addition of millions to the labour force kept unemployment not only high but also rising at most times. The quality of employment has also remained poor, with the organised sector, which is believed to be providing “decent” employment, still employing 10-15% of the workforce and millions outside it being actually “working poor.” India’s so-called dividend from its demography is already on a declining curve, and the best the country can do now is to capture the remainder of it through efficient policy interventions. The Skill India Mission was designed to provide “market-relevant skills training” to 400 million young people by 2023, but its outcome has been modest, partly because it wasn’t reinforced by meaningful increases in outlays for health and foundational education. The policymakers are in two minds about which factor of production ought to be incentivised the most. Being a capital-scarce country, most incentives, including tax sops, here are calibrated to aid capital, rather than to produce better employment outcomes. Of course, elements that drive value addition help one another, but a more balanced approach would show that reaping demographic dividend is a bona fide policy priority.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 24-04-2023 at 04:30 IST