Goldman Sachs produced a model where economic growth is driven by the demand of an expanding and younger workforce. The initial work was of a simplistic kind although in later revisions,more sophistication was introduced. Yet in the public mind,the simpler version keeps reappearing. In this version,given the age structure of the population and the fertility and mortality rates,the Indian population expands to around a 1.4 billion stable equilibrium towards the middle of the century. It would also be a younger population. One worker would support more than four-and-a-half retirees in India,as compared to almost 1:1 in countries like Japan. China and the US would also have a disadvantage.
This would mean both higher savings and a very great expansion of demand emerging from a dynamically growing system. Income growth would also be higher. Some of it would happen to the extent to which the workforce grows faster than population. This difference would automatically mean a higher increase in per capita income. But a lot of the growth depends on assumptions. The savings rate had,for example,increased even when the workforce growth rate was not higher and so a simple correlation seems incorrect. More important is the higher participation of women in the workforce,emerging from an increase in the age at marriage and decrease in the age of having the last baby. But again in a patriarchic society,this is not inevitable.
Finally,a Skill Development Corporation was mooted. The practice of the directors of the IlTs preparing a strategic vision for technical manpower designed during the Rajiv Gandhi period was given up after the liberalisation reform. Unemployed,visionless and frustrated youngsters can become a liability rather than a bonus. The demographic dividend will only be available to the brave with an operative vision of the future. The Demographic Dividend will only be available to the brave with an operative vision of the future.
