X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

A Threat to Demographic Dividend
Tue, 6 Sep Pre-Open

Back in 2014, when the Prime minister, Narendra Modi visited the USA and in his address to an around 20,000-strong Indian diaspora at Madison Square Garden, Modi mentioned about demographic dividend.

The demographic dividend of a country essentially is a period of two to three decades when the birth rates go down and this leads to a situation where the workforce of the country is growing at a faster rate in comparison to its population. When nations reach a high ratio of such people they are expected to earn something called a demographic dividend. This simply means that because most citizens are working, economic growth goes up. The expectation and anticipation is that India is approaching such a position soon.

However, there is a threat to this demographic dividend. Nearly two-thirds of India's 1.3 billion people are under 35 years old. This rising demographic "bulge" will create the largest working-age population in the world. But it is important to note that growth in youth population is quite meaningless unless it is followed by job creation as well. This means that it is important to equip young Indians with the requisite skills and educational standards. Only then will their chances of gaining employment rise.

While about 13 million youngsters join the workforce in India every year, the labour ministry reports that one in every three graduates up to the age of 29 remains unemployed. The wide disconnect between industry and academia continues to spin out graduates who are less-than-trained for the job. As per an article in the Economic times, In August, nearly half a million people, including post-graduates, applied for 1,778 jobs as sweepers in the city of Kanpur. Similarly, Last year, in Uttar Pradesh, 2.3 million people sought 368 low-level government jobs that required a primary education and ability to ride a bicycle.

Vivek Kaul has explained how there are 33,000 new job seekers per day but only 4.4 million jobs created from 2009-2015. And this year's total (as recorded by the Labour Bureau) is at 0.15 million...among the lowest.

In his recent article, India and the Fallacy of the Demographic Dividend, Vivek pointed out the demographic dividend benefits a country if the government of the day is able to create the right environment for job creation.

So if job creation continues to lag, there will be no demographic dividend for India. And this could create problems of another kind for the country and even derail its growth story.

The major growth in young population is expected to come from the poorest states of India. Hence the demographic dividend can be fully reaped only if India is able to create job opportunities for the population in these areas. Large Investments need to be made in areas such as water harvesting and irrigation, large scale regeneration of arable land, strong logistics and cold chain infrastructure, and land and crop productivity. Providing a fillip to these industries will help in the creation of jobs for the youth in the rural areas catapulting India to become a strong global player in the field of agriculture.

Apart from job creation, another aspect that needs to be looked at is the skill level of the population. It is also important to relook at our training /education system and adjusting them to match the skilled demand of current times.

Otherwise, it will be a demographic disaster rather than a demographic dividend.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

Equitymaster requests your view! Post a comment on "A Threat to Demographic Dividend". Click here!

  

Become A Smarter Investor In
Just 5 Minutes

Multibagger Stocks Guide 2017
Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Jul 24, 2017 (Close)

MARKET STATS