Sunday, March 3, 2013
India is a youthful nation. India’s young people are on the move. They are reaching for new opportunities made possible. The United Nations defines youth as people between ages 15 and 24. By this measure, there are approximately 240 million youth in India, about 20% of the population, according to preliminary projections from the 2011 census. That’s up from 195 million in 2001.
The median age in India is 25, meaning that half the population is below 25 and half is above it. Compare India to Canada, whose youth make up just 12% of its population and where the median age is almost 40.
What’s the significance of these numbers for India? They mean that hundreds of millions of young people are or soon will be looking for jobs and spouses. If those hopes aren’t fulfilled, aspiration may turn to frustration. And, some social scientists say, that frustration can manifest itself in rising crime.
Demographic change in India is opening up new economic opportunities. As in many countries, declining infant and child mortality helped to spark lower fertility, effectively resulting in a temporary baby boom. As this cohort moves into working ages, India finds itself with a potentially higher share of workers as compared with dependents. If working-age people can be productively employed, India’s economic growth stands to accelerate.
Theoretical and empirical literature on the effect of demographics on labor supply, savings, and economic growth underpins this effort to understand and forecast economic growth in India. Policy choices can potentiate India’s realization of economic benefits stemming from demographic change. Failure to take advantage of the opportunities inherent in demographic change can lead to economic stagnation.
However, demography is not destiny; growth of the working-age share of the population does not automatically lead to an acceleration of economic growth. Demographic change may provide a boost to economic growth, but appropriate policies are needed to allow this to happen.
Without such policies, a country may instead find itself with large numbers of unemployed or underemployed working-age individuals. This scenario would be a “demographic disaster”, instead of a demographic dividend, in some instances promoting state fragility and failure, potentially with adverse political, social, economic, and ecological spillovers to other countries.
An additional demographic fact deserves mention: there are an estimated 11.4 million Indians living outside of India. The countries to which Indians have emigrated in largest numbers, as of 2010, are United Arab Emirates (2.2 million), the United States (1.7 million), Saudi Arabia (1.5 million), and Bangladesh (1.1 million). In 2000, 57,000 Indian physicians were living overseas.
In 2010, Indian emigrants are estimated to be sending home remittances totaling $55 billion, the most of any country, constituting about 4.5% of GDP. (Ratha, Mohapatra, and Silwal, 2011) The number of Indian immigrants in the United States has grown rapidly in recent years (there were 1.0 million in 2000). Their median age is 37, and just over half are female. Nearly three-quarters have at least a bachelor’s degree and nearly half work in professional occupations.
Mean personal income (in 2008 dollars) is $53,000, and median household income is $92,000. (United States Bureau of the Census, International Data Base (2008 midyear estimates). As political, economic, and social conditions change over time in India and its neighbors, the number of migrants, the skills they take to other countries, and the value of the remittances they send may change significantly.
India’s demographic evolution over the coming decades will provide a potential boost to its rate of economic growth – at a time when China will be losing the demographic impetus that has helped spur its economy. But the process is not automatic. Policy choices in the areas of governance, macroeconomic management, trade, and human capital formation can have a significant effect on realization of the demographic dividend.
Central to capturing the dividend is providing an economic environment in which working-age people are productively employed. Failure in this endeavor could result in a demographic disaster rather than a demographic dividend.
Demographics matter to the pace and process of economic growth and development – in India and elsewhere. While many factors influence economic growth, few are more important and reliable than demography. India’s changing demographics are creating a strong impulse for economic growth, and policymakers have several options for making this potential demographic dividend a reality.
The World Economic Forum (WEF) has released the Global Competitiveness Report 2012–2013. India ranks 59th overall among 144 economies, down three places from last year. Since reaching its peak at 49th in 2009, India has lost 10 places.
Once ahead of Brazil and South Africa, India now trails them by some 10 places and lags behind China by a margin of 30 positions. India continues to be penalized for its disappointing performance in the areas considered to be the basic factors underpinning competitiveness. The country’s supply of transport, ICT, and energy infrastructure remains largely insufficient and ill-adapted to the needs of the economy (84th).
It must be noted, however, that the situation has been slowly improving since 2006. The picture is even bleaker in the health and basic education pillar (101st). Despite improvements across the board over the past few years, poor public health and education standards remain a prime cause of India’s low productivity.
Turning to the country’s institutions, discontent within the business community remains high about the lack of reforms and the perceived inability of the government to push them through. Indeed, public trust in politicians (106th) has been weakening for the past three years. Once ranked a satisfactory 37th in this dimension, India now ranks 70th. Meanwhile, the macroeconomic environment (99th) continues to be characterized by large and repeated public deficits and the highest debt-to-GDP ratio among the BRICS. On a more positive note, inflation returned to single-digit territory in 2011.
Despite these considerable challenges, India does possess a number of strengths in the more advanced and complex drivers of competitiveness. This “reversed” pattern of development is characteristic of India. It can rely on a fairly well developed and sophisticated financial market (21st) that can channel financial resources to good use, and it boasts reasonably sophisticated (40th) and innovative (41th) businesses.
Today, India is facing a crisis; we are at a critical juncture. We are facing the threat of downgrade in ratings, declining growth, dismal job creation, acute shortage of skilled workers, high current account deficit and fiscal deficit, total lack of new projects and decrease in investment in infrastructure.
Young India has tremendous energy to overcome all above mentioned problems. We are surplus of human power. Our policy makers- particularly young political actors- need to take a serious note of it. To make these human energies suitable for the use in different sectors, we need to orient them as per demand. We have to skill them to make them employable and fit for jobs and demands. Such steps can convert this energy into pubic goods.
Government of India (GoI) and State governments need to work closely in tandem on this issue. There are many ways to achieve this goal. One of them is skill development of youths. A mammoth pool of talent continue to make India one of the most preferred destinations for Foreign Direct Investment
This Budget (2013) has also almost failed to address one of the grave problems of shortage of skilled workers, something that even US PresidentBarack Obama has taken note of. The UPA government has allocated a mere Rs 1,000 crore for skill development. Contrast that with the Rs 800 crore that just one state, Gujarat, has allocated for skill development. A comparison proves glaring situation.
Young India is a new catch for public actors. It is a new playing field for young political actors. Recent big protests against corruption and rape made us to feel and assess the gravity of this energy and discontent among masses. This new energy is in limelight which provides an opportunity to our policy makers to use them productively in nation making.
Youth energy is like an atomic energy. We can use it both ways. It can be changed for generating electricity or for making destructive bombs. This is an opportunity in the hands for our policy makers. They can enact laws for them. These laws will facilitate the conversion of youth energy into public goods. If this will not happen, then this energy may bring harm to the nation.
Young India is both voter and resource. Our political actors have to see from this angle. This natural resource is the ladder to power corridor. The political parties are always in search of political issues. They develop political product from such social and political situations.
The United Nations (UN) has declared 12 August as Youth Day. In 1985, The UN celebrated the first International Year of Youth. The Secretary- General Ban ki-moon says “To unleash the power of young people, we need to partner with them”. Our different level governments can use this day to launch projects, programs and to pronounce rules, regulations for this segment to partner with them.
Political products are sold during campaign for gaining power. This Youth India is a potent political issue to play with, albeit safely and cautiously. Those who will be able to tame this new segment of political landscape will rule in states and at centre.
Heera Lal (Views are personal and based on different sources)