The promise of demographic dividend will not last long. Can India take advantage of this demographic window in the next couple of decades and benefit from it?

Much has been said recently about India's demographic dividend: that its working-age (15-59 years) population, as of now, largely consists of youth (15-34 years), and as a result its economy has the potential to grow more quickly than that of many other countries, including China. China, because of its “one-child” policy over the past several decades will soon begin ageing and, as a result, say the demographers, will become less competitive. But can India hope to garner its demographic gift?

Demographic realities

According to the Census of India, while the proportion of population in the under 14 age group declined from 41 per cent in 1961 to 35.3 per cent in 2001 (that is, by 5.7 percentage points), the proportion of population in the age group 15-59 increased from 53.3 per cent to 56.9 per cent (that is, by 3.6 percentage points) during the same period. The proportion of those above 60 years of age also increased from 5.6 per cent to 7.4 per cent (that is, by 1.8 percentage points). In terms of absolute numbers, the increase in the 15-34 age-group population is even more dramatic: from 174.26 million (31.79 per cent) in 1970 to 354.15 million (34.43 per cent) in 2000. The youth segment of the population is projected to peak at 484.86 million in 2030.

This demographic fact has important implications for the labour market. According to official data, India's labour force, which was 472 million in 2006, is expected to be around 526 million in 2011 and 653 million in 2031. It is noteworthy that the growth rate of labour force will continue to be higher than that of the population until 2021. According to the Indian Labour Report, 300 million youth would enter the labour force by 2025, and 25 per cent of the world's workers in the next three years would be Indians.

The United Nations Population Division projections show that, while in absolute numbers the youth segment (15-34 years) of the Indian population tapers off after 2030, as a proportion to the total population it tapers off from 2010 itself. Although this tapering off is marginal (from 35.4 per cent in 2010 to 34.5 per cent in 2020, to 32.4 per cent in 2030) in the next three decades, it will be swift to follow (to 29.7 per cent in 2040, to 26.6 per cent in 2050). Even so, the youth segment of the population will be a massive 441.1 million in 2050.

Since a majority of the youth knock on the doors of the labour market right by the age of 15, the youth segment of the population will also have to be considered in relation to the larger working-age (15-59 years) population. The United Nations Population Division's analysis and projections offer valuable insights on this development. Although the percentage of the 15-34 age group reaches its peak (35.4 per cent) in 2010 and tapers off from then onwards, the percentage of the 15-59 age group reaches its peak (64.6 per cnet) only in 2035, and tapers off gradually over the next 15 years to 61.6 per cent in 2050 (still marginally higher than what it was in 2005, that is, 59.5 per cent).

Educational deficits

Thus the demographic predictions are loud and clear: that the promise of demographic dividend will not last long, in any case beyond 2050. Can India take advantage of this demographic window in the next couple of decades and garner its benefits? One cannot be too optimistic about this trend considering its poor education system from bottom to top. India's literacy rate, after 60 years of independence, is around 63 per cent — China's is 93 per cent. The largest part of India's schools is of poor quality. Teachers are inadequately prepared, weakly motivated, poorly paid, and frequently absent.

The situation in higher education is even more problematic for India's participation in the global knowledge economy. The overall quality of the higher education system is well below global standards and it has shown no significant sign of improving. High-tech employers complain that a large majority of engineering and other graduates are inadequately trained and must be “re-educated,” at considerable expense, by their employers or not hired at all. The large high-tech firms — such as IBM, Infosys and Wipro — have set up their own in-house academies to prepare employees for productive work.

The highly regarded Indian Institutes of Technology and a small number of other Indian world-class institutions produce only a small number of graduates each year. Many of these graduates leave the country for employment or further education immediately after graduation.

The government's plans for expanding and upgrading higher education are inadequate both in size and scope. They are also impractical. For example, the IITs are already short of staff and cannot find the quality of professors that they need. The “protective discrimination” policy in vogue that reserves close to half of teaching positions for members of indigenous tribes, disadvantaged castes, and other groups makes it even less likely that top-quality faculty can be found. Some of the new IITs, now in the planning stage, are located far from metropolitan areas, and convincing well-qualified faculty to relocate there will be difficult if not impossible.

On the quantitative side too, there are problems. India now educates only 10 per cent of the age group in higher education. Dropout rates among that 10 per cent are high. A growing number now attends often low-quality colleges and other institutions that are not funded by the government — some of which are little more than teaching shops and degree mills. Current plans to raise the participation rate to 15 per cent by 2015 — still well under what other emerging economies are now educating — seem inadequate to achieve 15 per cent participation.

India has a serious “infrastructure problem” in education as it does with roads, ports, public transportation, electricity, and so on. Long-term inadequate spending and poor planning will catch up with India's booming economy at some point. In terms of human resource, it is not enough to have lots of young people — these young people need to be properly educated to fully contribute to the new economy. After all, as the Swiss psychologist and psychiatrist, Carl Gustav Jung (1875–1961), expresses: “The wine of youth does not always clear with advancing years; sometimes it grows turbid.”

(Philip G. Altbach is Monan professor of higher education and director of the Center for International Higher Education at Boston College, USA. N. Jayaram is professor, Centre for Research Methodology, Tata Institute of Social Science, Mumbai.)

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