Sunday, 24 September 2017

INDIA'S DEMOGRAPHIC HANDICAP


A UN forecast tips India to surpass China in terms of population by the year 2024. The same forecast estimates that the Indian population could cross 1.5 billion by 2030. To put this in perspective, India and China will together have accounted for almost 38% of the world population by then. But while China's national agenda seems to have given significant focus to population control, India's efforts in this direction thus far have been perfunctory at best. There was a time when large families were considered a blessing because 'many hands make light work'. However, in current times of over-stressed resources, drying investments, dearth of job creation and human jobs being threatened by artificial intelligence, a rapidly rising population could mean a looming crisis.

Only a few months ago, India had surpassed China to emerge as the 'fastest growing large economy'. However, the economy is currently in a tailspin, grappling with high inflation, poor consumer demand, lower private investment and stagnation in exports, among other worrying factors. The demonetisation of November 2016 and the seemingly poorly implemented GST are likely to have given rise to significant uncertainties pertaining to growth, inflation, liquidity and the banking system in the country, at least in the short to mid term. Consequently, there are concerns that GDP growth is likely to drop by at least two percentage points. Some economists opine that a drop of one percent of the GDP leads to the loss of about one million jobs. And worryingly so, a survey conducted by economic think-tank Centre for Monitoring Indian Economy estimates that roughly 1.5 million jobs have been lost between January and April 2017.

As per a UN report, the size of the Indian working-age population increased by 300 million between 1991 and 2013, while the number of employed people increased by only 140 million. In China, the number of jobs grew by 144 million between 1991 and 2013 for a 241 million rise in the working-age population. The relative inability of the Indian economy to generate sufficient employment signifies a serious challenge given the continued expansion of the workforce in India. As per media reports, this situation has worsened ever since, with merely 1.35 lakh new jobs having been created for the 12 million people that entered the workforce during that period. Although the government had initially promised to create one crore jobs per year, one of its pledges for 'New India', as listed on the PM's website wants citizens to be "job creators rather than job seekers".

The Centre has now indicated that they might release a stimulus package to boost the economy and help create more jobs. Needless to say, this needs to be done quickly; the spurt of layoffs being witnessed in the recent months is alarming. Without a quick and sustainable remedy to the looming crisis, India's potential demographic dividend will be rendered a colossal 'demographic handicap'.

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