From political campaigns to research publications, each and every one cites India’s demographic dividend as a potentially massive catapult in our aim of economic transformation.
India has more than 50% of its population below the age of 25 and more than 65% below the age of 35. It is expected that, in 2020, the average age of an Indian will be 29 years, compared to 37 for China and 48 for Japan; and, by 2030, India’s dependency ratio should be just over 0.4.
With 356 million 10-24 year-olds, India has the world’s largest youth population despite having a smaller population than China.
China is second with 269 million young people, followed by Indonesia (67 million), the US (65 million) and Pakistan (59 million), Nigeria with 57 million, Brazil with 51 million, and Bangladesh with 48 million, says the United Nations Population Fund’s (UNFPA) State of the World’s Population.
Although the Republicans may detest President Obama’s orders to stop the deportation of millions of immigrants and the EU countries relooking at their immigration policies, this is a necessary evil they have to deal with. The fact remains that the average age in the West is increasing by the day with more and more of its working population ageing too fast and too many. Even with all the far-right political rhetoric, the day is far when these countries actually ban the entry of immigrants from the third world. The constructive in this regard is simple: for a growing economy you need an able, young work force. If every person is an industrialist, where would the labor force spring up from? The obvious answer would be the young and gullible people that come to the West seeking a better life than the one they left behind. The West has realized that exploitation of this demography is in their best interests. The developing nations have not.
Apart from investments in defense and infrastructure, there is an urgent need to invest in this 65% population of the nation which would then augment and expedite this process of economic transformation and poverty alleviation.
The Union Budget 2015 promised a slew of reforms and structural changes to fast track the agenda of the NDA government at the centre.
The first NDA budget passed in the previous year was a lackluster exercise with much furor but less substance. Arun Jaitley was forgiven with his immediate defense being the time constraints, the Narendra Modi government being sworn in only a couple of months ago. But it was only a vote-on-account since the budget had been placed before the House by the previous UPA government. The preparation for financial statement for that year gave the Modi government a feel of pragmatism, albeit a hurried one.
This positive pragmatism settled in over the following days helping Jaitley and Jayanth chart a more structured course while walking a tight rope, balancing between rejuvenation of growth and sticking to the looming fiscal target. The budget this year hasn’t failed everyone’s expectations.
While the big ticket investments needed to revive growth have been limited by the need to keep the fiscal deficit roadmap on course, there are major changes in taxation and other areas that are truly reformist.
What’s in it for the youth?
Finance Minister, Arun Jaitley in the Union Budget 2015 announced a slew of skill development and employment schemes. He said that the main aim of the government is to create entrepreneurship among Indian youth.
The initiative of creating the local entrepreneurship includes agricultural development and boosting up education for the youth. In order to support the agricultural sector, the Finance Minister also proposed to allocate 25,000 crore in 2015 to rural development funds.
An integrated education and livelihood scheme called ‘Nai Manzil’ will be launched this year to enable Minority Youth who do not have a formal school-leaving certificate to obtain one and find better employment.
With rural population still forming close to 70% of India’s population, enhancing the employability of rural youth is the key to unlocking India’s demographic dividend. With this in mind, the Deen Dayal Upadhyay Gramin Kaushal Yojana has been launched. Rs 1,500 crore has been set apart for this scheme. Disbursement will be through a digital voucher directly into qualified student’s bank account.
With a view to enable all poor and middle class students to pursue higher education of their choice without any constraint of funds, a fully IT based Student Financial Aid Authority shall be set up to administer and monitor Scholarship as well Educational Loan Schemes, through the Pradhan Mantri Vidya Lakshmi Karyakram.
A lacuna in the current system is the ‘Skipped Generation’ as I call it. This is a post-independence second or third generation of youth who are close to now leaving this youth bracket. A massive, if not majority of these generations have had the misfortune of forgoing their education and now face the brunt of the usual social evils like poverty and unemployment apart from much deadlier one like criminalization, terrorism, insurgencies etc. These youth are well past the age where a school education would be applicable to them. However, the Prime Minister has rightly pointed out to the need for Skill Development which would arm them with necessary qualities to attain employment through the ever-increasing Skill India and Make in India programs.
The FM stressed upon the need to integrate these illiterate and unemployed into the vast market we endeavor to build. Educating and skilling our youth to enable them to get employment is the altar before which we must all bow. To ensure that there is a senior secondary school within 5 km reach of each child, he reiterated the need to upgrade over 80,000 secondary schools and add or upgrade 75,000 junior/middle, to the senior secondary level. It must be ensured that education improves in terms of quality and learning outcomes.
Soon, a National Skills Mission will be launched through the Skill Development and Entrepreneurship Ministry. The Mission will consolidate skill initiatives spread across several Ministries and allow the government to standardize procedures and outcomes across its 31 Sector Skill Councils.
A major challenge is that manufacturing has declined from 18% to 17% of GDP as per new GDP data; and manufacturing exports have remained stagnant at about 10% of GDP. This process of Skill Development and high employment needs to be expedited with a view to overcoming these challenges.
A case for Financial Markets.
A personal concern which has troubled me since a very long time is the lack of access to entrepreneur finance in India. If we truly wish our youth to be job-creators instead of job-seekers, it is a positive chord to strike. It will reduce the dependency on foreign corporations preventing occasional headaches such as mass lay-offs and discrepancies in payments. In the case of manufacturing, it will integrate the domestic job market with a domestic industrial base driving our export volumes. However, the lack of institutions to provide finance to upcoming and bright entrepreneurs has been a case for great concern. This goes on like a permanent cycle. The institutions don’t exist because a nation is poor. The nation is poor because the institutions do not exist.
Finance Minister Arun Jaitley has not made much headway in breaking this cycle. Although a few loose frameworks exist in some states to give a leg-up to young and upcoming entrepreneurs, they are either dismally stringent or grossly unpublicized. A constructive argument in defense is that in most of first world, such financial markets are private efforts an interventionist government may actually prove to be an impediment in their organic and institutional development. However, this wait has gone on for too long. The government has rightly decided to abolish the wealth tax and replace it with an additional surcharge of 2% on the super-rich with a taxable income of over Rs1 crore. The financially stable individuals and corporations need to work in tandem with the government in creating these financial markets. The additional surplus obtained from charging the super rich needs to be spent on investing in human resource rather than on menial expenditure.
A positive gesture towards to ‘Skipped Generation’ would be to make sure that future generations do not merely come up in this atmosphere of reliance and subsidies. Economic equity and stability are the need of the hour.