Demographic Challenges for India

We all know what India’s demographic dividend is. From 2015 to 2050, it is expected that at all points, 60% of Indians will be in the age group of 15-60 years – the working age. These people can work, earn and spend, thus leading to a long term consumption story for India. But underlying this data are some disturbing trends. A finer study of this workforce gives insight into 3 areas.

1) 40-45% of our workforce is engaged in Agriculture, yet Agriculture contributes less than 20% to the GDP. If you add Construction as well, 56% of the workforce is engaged in Agri and Construction, but contribution to GDP from these two segments is 25%. Either the output is too low, or too many people are employed in these segments, or a combination of both.

2) Women participation in labor force in India is low as compared to many other emerging nations. Surprisingly, urban numbers are lower than rural numbers, which means a very well qualified resource pool is not getting employed, due to either lack of opportunities, encouragement or supporting infrastructure.

3) Most of the workforce in the Non-Farm segment is in informal jobs. The need of the hour is to create formal and skilled jobs, and help this workforce move towards those.

Our consumption story has played out despite these challenges. If we can create more formal jobs and create more opportunities for women to participate in the workforce, imagine how high the demographic dividend could be. Who knows if this could result in a consumption boom even bigger than what we have seen in the past. What do you think should be done in order to address these challenges?

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