'As richer nations age, India is growing younger: 60 per cent of its current population is aged below 25, and the present working-age population (aged 15-59) is four times that of the United States, according to official and non-governmental organization (NGO) data.
A report by investment bank Goldman Sachs estimates that by 2020, the US, China, Japan and Russia would together face a shortfall of 42 million people of working age, while India would have a surplus of 47 million.'
But alas, this analysis does not hold up for scrutiny because if we look inside India we find that there are large boundaries for the effective deployment of the country's workforce.
'Despite an ambitious development agenda, the future does not augur too well. A study by the Vienna Institute of Demography concluded on the basis of the experience of the past decade that 30 per cent of Bihar and 20 per cent of Uttar Pradesh states would remain illiterate in 2026.
Bihar and Uttar Pradesh are among the five states with lowest development indicators that, according to demographic projections, will account for nearly 60 per cent of the increase in population by 2026.
Bringing the youth of these states into the loop would require huge investment in providing basic amenities like drinking water, sanitation, healthcare and primary education, experts maintain. But they add that there is no shortage of resources or capacity. The root cause of slow progress is the lack of political will.'
In fact, when we speak of India and demographics it is fruitful not to analyze the country as a whole but instead to look at bit more closely at what actually are the demographic realities of this country. To that end Edward had an informative post over at The Indian Economy Blog some time ago.
'The idea that India is not one country but two (or more?) is, of course, not a new one, but it does seem to me to be a thesis which is worth revisiting, in particular in the light of India’s current demographic realities. Chris Wilson in a paper (pdf) entitled “Implications of global demographic convergence for fertility theory” suggests that in order to understand anything which is worth understanding about India some type of regional dis-aggretation is vital since there is so much variance between states. In arguing this he makes the following seemingly valid point that.'
So what do we have here? Comparing numbers like I did initially above does not serve much purpose. We need to approach this in two steps.
1) Before we can understand how India's demographic development will interact with the rest of the world we need to understand that development. Here we can immediately make two points; firstly we must be aware of the demographic disparities within India and how the dynamics of immigration can potentially amend this. Secondly we must realize that merely resting one's analysis on the fact that India is passing through its demographic dividend with a favourable dependency ratio to follow is not quite enough. Whether India can actually exploit this is the real question and since I do not want to open Pandora's Box I will leave this question for now.
2) Once we have a bit more clear picture of the internal demographic dynamics of India we can begin to ponder about how and to what extent India's surplus of workers can offset the decline of workers elsewhere. Here the numbers seem to add up quite neatly and already the business-trend of offshoring to India is a part of every serious textbook on business strategics. In short, India has so much potential in its own right and for the rest of the world to draw upon but we cannot say for sure how far this will go in the future.