To obtain full benefits of demographic dividend, what should India do?

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UPSC Prelims is a competitive examination conducted in India. This question is from the 2013 UPSC Prelims Economy paper.

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Question

To obtain full benefits of demographic dividend, what should India do?

Accepted Answer

Correct Answer: A — Promoting skill developmentStep-by-step Solution:Demographic dividend refers to the economic growth potential that can result from shifts in a population's age structure — specifically when a large proportion of the population is in the working-age group (15-64 years) relative to dependents (children + elderly). India is in the midst of its demographic dividend window (approximately 2005-2055), with a median age of about 29 years and a large, young workforce.To convert this demographic advantage into actual economic growth, the young population must be productive and employed. The key requirement is that the workforce has the skills demanded by the economy. Skill development is therefore the most direct way to extract the full benefit of demographic dividend.Why other options don't directly fulfil the demographic dividend:Option B — More social security schemes: Social security (old-age pension, unemployment insurance, health insurance) primarily benefits the elderly and vulnerable — it redistributes income rather than enhancing productivity. While important for social welfare, it does not convert young workers into productive contributors. It may even reduce the incentive to work.Option C — Reducing infant mortality rate: Reducing IMR is a Millennium Development Goal and a health objective that increases the working-age population in the future — but the demographic dividend window is already open. The priority now is to make the existing young working-age population productive, not to add more people to the future workforce.Option D — Privatisation of higher education: Privatisation can increase supply of educational institutions but may also make education costlier and inaccessible to large sections — potentially excluding the poor from education and reducing the effective skilled workforce. This would harm rather than help demographic dividend realisation.Key Concept: Demographic dividend: India's working-age population (15-64) exceeds dependent population; peak dividend window ~2020-2030; potential adds 1-2% to GDP growth annually if realised. Key prerequisites: quality education; vocational and skill training (Pradhan Mantri Kaushal Vikas Yojana — PMKVY; National Skill Development Mission); job creation (labour-intensive manufacturing); health (healthy workforce); gender inclusion (female labour force participation — India's FLFP is very low at ~20-25%). Skill India Mission (2015): to train 400 million people by 2022; National Skill Development Corporation (NSDC); Industry-linked training. East Asian countries (South Korea, Taiwan, China) realised large demographic dividends through skill development + export-oriented manufacturing. India's challenge: low FLFP; large informal sector; quality of education; urban-rural skill gaps.

To obtain full benefits of demographic dividend, what should India do?

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More Questions from Poverty, Unemployment & Social Inequality

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To obtain full benefits of demographic dividend, what should India do?

Master UPSC Prelims with Our Test Series

More Questions from Poverty, Unemployment & Social Inequality

Frequently Asked Questions