This article was last updated on April 16, 2022
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“Battles of this century will be fought and won on power of ideas, skilled human resource and young population”.
— anonymous
Come what may, India has distinct advantage on demographics and the dividends are bound to come over next forty years. And, this distinct advantage and dividends would continue to be powered by the ideas, skilled human resource and its young population raring to go.
Much has been written and talked about this advantage. As a US-based Boston Consulting Group study put it: this advantage has presented an opportunity for India worth $ 200 billion in annual revenues, 40 million new jobs by 2020 and turn the country into an enviable power house of human resource to the world.
As per projections of Census of India, the official agency tracking population, the country will house an overwhelming 486.86 million young men and women by 2030.
This by far, will be the largest chunk of world’s population if trained can power the global economic power engine spread across sectors like manufacturing, services, agriculture and trade.
India’s distinct advantage becomes all the more amplified given the shortages of human resource likely to be faced by nations across the globe: be it USA, Europe,China, Japan etc.
Ed Potter, formerly President of the US Employment Foundation in the American Workforce report way back in 2001 predicted that USA would face workforce shortage of 36 million by 2031. Similarly, German Institute of Economic Research has estimated ten years back that the country may have to either import or outsource work for 1.2 million people to counter its ageing workforce.
It is not just US and Germany, Japan would need 600,000 immigrants a year to make up for workforce shortages that it is bound to face as per a report in UK-based newspaper, The Guardian. Same is the case with United Kingdom that may have to import trained young workforce to fill in the gaps in its industry, services and government.
Another large country that would face human resource shortages is China. As per a projection made by US Census Bureau, China Will have 10 percent shortage in working population in age group of 15 – 59 years by 2030. The shortages may accentuate owing to ‘one child policy’ that the country has consciously adopted to keep the population explosion under check.
Now, there are arguments for and against the ‘demographic advantages’ and possible ‘demographic dividends’ that Indian can reap. And, the jury is out as to what would be its implications for Indian economy and its people.
In this context, quoting Prime Minister Manmohan Singh on India’s demographic advantage is pertinent. Time and again Prime Minister Singh has identified that significant investments and infrastructure that will have to be made in education and skills development for millions of youth.
Nobel Laureate Amatya Sen has rightly pointed out that unless the Indian population is prepared for positively exploiting the demographic window available, the large unemployed population could become a ‘drag on the nation’. As per a BCG study, there are 37 million unemployed youth in India, a substantial chunk that is educated.
While the education and health infrastructure continues to be expanded, Indian skilled youth have begun servicing the global industry especially in education, healthcare, financial services, tourism, hospitality and several other services industries. So much so, that the information technology based industry in India has evolved into $ 50 billion venture. Undoubtedly, today India is already with a large workforce that works for the global industry albeit remote.
The new wave of economic liberalization and linkages with world economy provides an ample opportunity for the trained workforce in India itself as demand for goods and services increase; merchandise exports grow rapidly and also farm sector expansion with attendant development of food and dairy sector.
Aggressive acquisitions that are being made by Indian large corporates internationally and integrating them with manufacturing facilities back home have added a new dimension to the demographic issue. For instance, the Tatas acquiring the iconic Jaguar and Land Rover have led to integration of workforce from the two continents, Asia and Europe.
Hence, priority may be given to meeting the skilled workforce shortages back home in several sectors like information technology, textiles, handicrafts, garments and engineering goods before considering shortages elsewhere.
Even the global shortages would most effectively would be serviced ‘remote’ with evolution of cutting edge technologies like 4G telecom services and cloud computing apart from advancement in internet protocol based TV. Even if India were to meet some of the human resource shortages globally, it may not lead to large-scale movement of its people but over 80 percent services would be managed remotely.
However, there are services like healthcare where professionals are required to be present in ‘person’. Engineers, doctors and teachers may have to be on the spot to provide these services though tele-medicine, online medical services and e-education are in the vogue. Alternatively, the manufacturing capabilities will have to be exported by India to meet the shortages for goods and services in both Western Europe, US,Russia, Japan etc.
“As Prime Minister Singh said, rapidly imparting skills and retooling our young workforce through large investments in related infrastructure and training continues to be a big challenge” said Roopen Roy, managing director of Deloitte and Touhe Consulting, an independent consultancy.
Overhauling education system that is already on reform path seems to be the way that India can reap dividends from the demographic advantages that it has over next 30 years. For instance, the government’s decision to set up 100 technical training institutes in collaboration with the industry through public private partnership is a pointer. Similarly, setting up super-specialty healthcare and related education institutes would lead to producing world class surgeons and specialists. Investing billions of dollars in universal education would also aid this campaign for tapping this ‘window’ of demographic advantage.
Indian National Knowledge Commission headed by Sam Pitroda had said, “Our youth can be an asset only if we invest in their capabilities. A knowledge-driven generation will be an asset. Denied this investment, it will become a social and economic liability.” And, this seems to be very apt.
K.A. Badarinath is Editor-Policy, Financial Chronicle, New Delhi
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