Demographic dividend to peak by 2020
The country is fast approaching its peak demographic dividend. The peninsular states would hit the crest, followed by the hinterland states, the Economic Survey said.
The growth boost from the demographic dividend is likely to peak within the next five years, as the country’s share of working-age population reaches a plateau. India’s growth story has gained from, besides other things, a demographic dividend — larger number of young working people and fewer dependent non-working people. But, the demographic changes India would experience are likely to be different from what other countries have experienced earlier in time, concluded the Survey. “India’s peak will be reached in the early 2020s as a whole and peninsular India will peak around 2020, while hinterland India will peak later around 2040,” it claimed.
Unlike two other emerging economies, Brazil and China, India’s working age (WA) population to non-working age (NWA) population was likely to peak at 1.7. The two other countries had much higher levels at peak which lasted at least 25 years. But India’s peak plateau period would last longer than other countries.
The differing trend would also set a different profile for India’s economic growth as compared to the East Asian ‘tiger’ economies. The Survey’s authors noted, “India should not expect to see growth surges or growth decelerations of the magnitudes experienced by the East Asian countries.”
The regional variation within the country, too, would have consequences for the nature of growth. The working age ratio of most peninsular states is likely peak at levels lower than seen in East Asia. In contrast, the hinterland states will remain relatively young and dynamic, characterised by a rising WA population for some time. This prolonged demographic dividend in the “hinterland” would provide the poorer states help in catching others and lead to faster convergence of income levels across states. Bihar, Jammu & Kashmir, Haryana, and Maharashtra could expect a greater demographic dividend over the coming years while Kerala, Madhya Pradesh, Chhattisgarh and West Bengal might suffer from a relatively low divident for their level of income.