Investments in India’s huge demographic dividend can influence human capital formation: Turning challenges into opportunities
India has the world's youngest population, with 835 million people under the age of 35 as of 2021. But then again, several other countries have a younger demographic than India, like Chad, Niger, Somalia, Afghanistan, etc. But the factors above put India in the picture of a distinct advantage. Earlier, large populations were seen as an outcome of unplanned growth, overconsumption, and failed results. However, very recently, the relationship between population growth and development has been viewed from the age-structural transition leading to the euphoria of demographic dividend for many developing countries. Researchers have observed that the rising economic growth of a nation can be attributed to its demographic dividend, as the increased labour force enhances the economy's productivity. But necessary steps like policy support and reforms must be taken to fully utilize India's demographic dividend to promote the growth and development of the economy. However, India has been operating against the backdrop of specific challenges like the 4th industrial revolution, the global pandemic, Ukraine crisis leading us to the current economic slowdown, which has triggered layoffs, and growth decline in various sectors. This has limited its scope to exploit the demographic dividend completely. Now when the pandemic, as an external shock, has finally contracted the economy, we plan to "Build back better" by engaging the youth. However, this trend has more or less reversed now.
To capitalize on the country's potential in terms of human resources, the Government of India has announced plans to revitalize, recover, and raise its potential by the following four mandates apart from other initiatives:
Firstly, beyond creating infrastructure and investment, the Government has also taken several steps to develop a skilled pool of human resources through the New Education Policy, with the motto of Educate, Encourage and Enlighten. With that in mind, the Government of India introduced NEP 2020 to provide universal access to schooling at all levels, from pre-school to high school. This act aims to create innovative education centres, track students and their learning levels, and facilitate numerous learning pathways incorporating formal and non-formal education modes. Further, NEP 2020 aims to reintegrate about two million out-of-school children into the mainstream.
Second, women's participation in the labour force and broader development outcomes, on the other hand, are intricately linked. So, over the last 50 years, India's MSME sector has become a lively and active part of the economy. They have assisted in industrializing rural and disadvantaged areas, decreasing regional imbalances, and ensuring a more fair distribution of national revenue and wealth, especially for women. One such is the STEP program started by the Ministry of Women and Child Development, which provides training to poor and marginalized women in traditional trades to improve employability. The scheme is intended to benefit women who are in the age group 16 and above. Several sustained initiatives on education and employment of women have resulted in increased opportunities for their employees, and more and more women are gainfully employed. However, working mothers continue to face the double burden of work as their participation in the labour force doesn't reduce their domestic duties. This calls for maternal-friendly initiatives like daycare services to provide quality care and protection for the children under the National Creche Scheme for children of working mothers.
Third, the Digital India campaign that started in 2015 led to the rise in India's digital economy. Currently, a large share of the trade is done through digital means and the estimated value of total goods sold in 2021 by digital means is $55 billion. In India the digital economy is expected to reach $350 billion by 2030. The digital economy can also unleash the potential to create ample job opportunities and economic growth in the country in the coming years. One of the best examples of this would be the Unified Payments Interface (UPI) an instant real-time payment system developed by the National Payments Corporation of India (NPCI). Here, we use inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions every day. This payment system has gained so much popularity for its ease of use that 39 other countries use it.
Fourth, India is making steady progress toward its goal of developing a thriving startup ecosystem. For the support and benefit of entrepreneurs, the Government has created a separate ministry dedicated to assisting new businesses and providing them with valuable expertise and other facilities to grow. The Indian Government has launched various plans and programs to aid startups and promote the 'culture' of entrepreneurship among Indians. Several of these programs include the Aatmanirbhar Bharat App Innovation Challenge, the SAMRIDH Scheme, the Startup India Seed Fund, the Startup India Initiative, the Startup Leadership Program, ASPIRE, and others.
In conclusion, to transform our India, we need a holistically educated, skilled young population empowered to take risks and build businesses that generate revenue and employment for others. To create a culture of this, we need investment in more inclusive, gender-sensitive policies and practices, futuristic ideals, more significant technical standards, and secure and sustainable jobs for the youth. This symbiotic investment in developing our youth's future is how India plans to turn challenges into opportunities.
Disclaimer: Views are personal.