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Is India failing to capitalize on its demographic dividend?
Wed, 23 Apr Pre-Open

The Indian economy has been on a slow track for quite some time now. However, despite a lot of things going wrong, what makes the country stand apart is the huge demographic dividend it enjoys. The country is a land to the highest share of youngsters which can be a huge asset for any economy. This is because it also implies a higher proportion of working age population with respect to its entire population. However, this very strength may become a huge liability if it is not given the right opportunities.

Unfortunately, the country seems to be failing to harness the youth capital. Some of the obvious reasons are slowing economy and hence lesser employment opportunities. Other reasons are structural in nature, for e.g., lesser need of human capital with rising mechanization and automation and more expansion in service sector jobs which is less labor intensive.

What complicates the issue further is the mismatch between the available and required skills. The root cause of the same lies in a flawed education system which insists on rote learning with little application in job field. Hence, even in cases when people are qualified, they are hardly competent to take up the available jobs.

On the top of all this, we have archaic labour laws. The same restrict right sizing of manpower. In times when the markets are driven by demand and customers, these laws have taken away the flexibility from the firms in managing manpower as per the changing demand and trends. As such, firms have switched to hire contract labour. This trend of rise in the contract labour has come along with increasing labor unrest due to underlying job security.

Gradually, because of the above mentioned issues, the growth pattern in the economy is getting distorted with huge gap between rich and poor class. One should not forget that the economic disparity has been the major cause of social unrest and anarchy. If the Government fails to address these issues and to keep its youngsters employed, the much hailed demographic dividend can become the biggest liability for India.

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