India's demographic advantage

In the last 6 to 8 years of India’s growth story since 2004, we have heard many economists and market analyzers around the world saying “India enjoys a demographic advantage which has not only boosted India’s growth but helped India achieve high levels of growth despite weak and ineffective governance”.

Indecisiveness and lack of urgency to take decisions at the right time has been one of the trademarks of Indian governance. This not only has discouraged investments in different sectors in the country but also has sent a negative impression about India as an investment destination. And we all know how much role impression plays in today’s world. Hurdles are many to make India the least developing nation in the world. Huge levels of corruption in governance and local administration, and sky rocketing inflation. Each of these factors is sufficiently capable enough to push India’s growth rate way below around 3 to 4%. Despite all these factors taking their toll on the growth, India has managed an impressive growth rate of 6 to 8% in the past decade. A part of this credit goes to demographic advantage that India is having sitting silently on the back seat. So what actually demographic advantage is? How it really works? Has it helped India in achieving desired levels of growth?

Demographic advantage is the advantage that any country enjoys on the basis of the size of its population and the average age of its citizens. India being the second most populous country in the world with its average age of citizens being 21. India's demographic profile is now in flux and it is changing in a way that is quite favorable to economic growth. The iron law of demography tells us that baby boomers reach working age within a period of 15 to 25 years; and when that happens, the productive capacity of the economy expands on a per capita basis and a demographic dividend is in prospect. All we need now is the right set of policies that can generate enough job opportunities for the upcoming work force. This will magnify the demographic dividends and therefore will push the growth on right track. This is our time and I hope India writes its own history and creates its own space in this fast changing world. Hope this happens.