Directions (1-10): Read the following passage to answer these questions given below it. Certain words phrases have beenprinted in bold to help you locate them while answering some of the questions:
India has one of the youngest populations in an aging world. By 2020, the median age in India will be just 28,
compared to 37 in China and the US, 45 in Western Europe, and 49 in Japan. Demographics can change thepace and pattern of economic growth. While Chinas spectacular growth has already benefited from ademographic dividend, India is yet to do so. Demographic dividend can increase economic growth through sixchannels. The first channel is through the swelling of the labour force, as more people reach working age. Thesecond channel is the increased fiscal space created by the demographic dividend to divert resources fromspending on children to investing in physical and human infrastructure. The third channel is the rise inwomens workforce that naturally accompanies a decline in fertility, and which can be a new source of growth.The fourth is the increase in savings rate, as the working age also happens to be the prime period for saving.
The fifth channel is an additional boost to savings that occurs as the incentive to save for longer periods ofretirement increases with greater longevity. The sixth channel is a massive shift towards a middle-classsociety that is already in the making. Growth, education, home ownership, better economic security, and adesire for more durable goods are the cause and consequence of young demographics. But demographicdividend can also transform into a curse, and we examine its impact in Reshaping TomorrowIs South AsiaReady For The Big Leap?, World Bank.
The growth benefit of a demographic dividend is not automatic. A lot depends on whether the bulge inworking population can be trained, and enough jobs created to employ the 10 million more people who willjoin the labour force every year. There is mounting concern that future growth could turn out to be joblessdue to de-industrialization, de-globalization, and the fourth industrial revolution and technological progress.While digital technologies may enable the creation of new products and more productive jobs, they may alsosubstitute existing jobs. India may not be able to take advantage of these opportunities, due to a low humancapital base and lack of skills. Lack of jobs combined with a demographic dividend will increase the share ofthe population that is dependent on the working population. This will increase the economic insecurity of theelderly, as there will be fewer people generating wealth. Whether the demographic dividend promotes growthor transforms into a curse depends on how prepared the states that should benefit from a young populationare. Bihar, Uttar Pradesh and other lagging states will experience a much bigger bulge in working populationthan more developed states like Tamil Nadu. Unfortunately, the less-developed states are also the least
prepared to take advantage of the demographic change they will undergo.
Investing more and more eficiently in people will enable India to tap into its demographic divided, andprepare the country for the future. There is a powerful link between these investments and economic growth,stability and security. Investing in people through healthcare, quality education, jobs and skills helps buildhuman capital, which is key to supporting economic growth, ending extreme poverty, and creating moreinclusive societies. Human capital is now the fastest-growing component of Indias wealth. It is already thelargest component of global wealth. More developed and richer countries have vastly more human capitalwealth than developing countries. Indias human capital base may not be adequate for the future or in aposition to benefit from the demographic dividend. India is home to the worlds largest concentration ofilliterate people in the world. It has made gains in human development, but challenges remain, including bigbarriers to secondary schooling, low-quality public services, and gender discrimination. New technology couldbe exploited to accelerate the pace of building human capital, including massive open online courses andvirtual classrooms.
Pursuing a more aggressive education agenda fits very well, not just with countries that will benefit from thedemographic dividend, but also with what many governments in rich countries are trying to do, even in its
absence. Demographic dividend is a time-limited opportunity, and policymakers should have a greaterincentive to redouble their efforts to promote human capital so that it can contribute to conomic growth andjob creation.
No country can achieve its potential and meet the challenges of the 21st century without the full participation
of working population, both women and men. High-quality education is one of the strongest ways forcountries to reduce poverty, achieve gender equality, and create more jobs. Building human capital translatesinto higher rates of economic growth and job creation. Demographic dividend without investments in humancapital will be a wasted development opportunity, and it will further widen economic and social gaps, insteadof narrowing them.