Human Development

As per the National Family Health Survey-5, India’s Total Fertility Rate (TFR) has declined from 2.2 in 2015-16 to 2.0 in 2019-21. With falling fertility, rising median age (from 24 years in 2011 to 29 years currently which is expected to be 36 years by 2036), and a falling dependency ratio (expected to decrease from 65% to 54% in the coming decade), India is in the middle of a demographic transition. With this, India will have a nano demographic window in the two decades of 2020 to 2040, to achieve the socio-economic objectives as follows:

• Human capital formation: Increased investment in health, education, and skills for the younger population, as fewer resources are needed to be diverted for dependent populations ie. children and elderly. Thus, it will help in plugging income inequality through better job opportunities.
• Higher per capita: Low fertility scenario supports higher income per capita, higher capital stock per worker, and a lower unemployment rate, which will boost the GDP. These will help in achieving the goals of zero hunger and poverty.
• Increased labour force participation: A shift in the age structure of the population towards the working-age group will increase the potential labour supply. In addition, lower fertility induces more female participation in the labour market. It will help in achieving inclusive growth and socio-economic parity.

However, without adequate policies, the nano demographic window may lead to rising unemployment, thereby fuelling economic and social risks. Further, with the passage of time, the share of the older population will rise and that of the working age population will begin to fall. To address these challenges and to gain from the nano demographic window, India needs to take various measures, such as:

• Improving consumption patterns: Consumption imbalance between children and adults needs to be addressed by increasing investment in terms of nutrition and learning during early childhood to create a strong foundation for human capital.
  • As per the National Transfer Accounts (NTAs), a child in India consumes around 60% of the consumption by an adult aged between 20 and 64, while a child in China consumes about 85% of a prime-age adult’s consumption.
• Investment in education and healthcare: Public spending on health has remained flat at around 1% of GDP. It needs to be improved, particularly in states whose demographic window of opportunity is still more than a decade away, like Uttar Pradesh and Bihar.
• Allocation based on the latest population census: There should be devolution of more funds to states with a higher working population in order to nurture more human capital.
• Transition in skilling: There should be greater focus on transitioning from secondary education to universal skilling and entrepreneurship. Also, upgrading skills in terms of emerging technologies like Artificial Intelligence helps get the Indian workforce ready to enter the 4th Industrial Revolution.
• Increasing share of women workforce: As of 2019, 20.3% of women were working or looking for work, down from 34.1% in 2003-04. This has to be increased through tax incentives and other measures like gender budgeting.
• Creating employment opportunities: Providing incentives to start-ups and large manufacturing industries through schemes like Make in India, Stand-Up India, and Start-Up India will help to provide employment to the available workforce.

Such comprehensive measures will help India not only to capitalise on the nano demographic window for becoming a developed country, but also to lay a solid foundation for the generation that will enter the demographic divided window.