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Demographic dividend in India versus China
Oct 31, 2015

During the economic boom of the 1990s and 2000s, it became fashionable to talk of India's forthcoming "demographic dividend”. This was quite a turnaround from the worries of bulging population in select Indian states. The experiences of East Asia and the demographic dividend it benefited from became a reason to be positive about India's future.

Working-age population in India rose at the same time as the ratio of dependents to workers fell. An associated rise in the rate of saving allowed scope for more investment. It was hoped that these savings will pay for the growth in manufacturing which would employ millions and lift people out of poverty. The timing of India demographic divide, as acknowledged in the BRIC report, was particularly encouraging. India's labour force was due to soar as China's began to decline.

Almost two and half decades later, is the equation in India and China's demographic dividend set to change dramatically?

For China the key issue over the past few years has been rising dependency rate. Faced with the challenge of falling work force, China has put an end to its three decade old one-child policy.

For India, the challenge is to provide jobs to its growing working population. While it is quite uncertain whether the change of policy will help China catch up in the race for demographic dividend, it is time for India to stop being complacent.

Data Source: Economist

This Chart Of The Day was published in The 5 Minute WrapUp - The Management Talk that Makes Sense to Us

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