India's demographic dividend to peak by 2020: Economic Survey

Peninsular states to hit their crest earlier than northern ones

India is fast approaching its peak demographic dividend and the peninsular states will hit the crest sooner than the hinterland states, the Economic Survey summarises. The growth boost from the demographic dividend is likely to peak within the next five years, as India's share of working-age population plateaus, the report assesses.

India’s growth story has gained from, besides other things, a demographic dividend -– larger number of young working people and fewer dependent non-working people. But the demographic changes India would experience are likely to be different from what other countries have experienced earlier in time, concludes the survey.

“India’s peak will be reached in the early 2020s as a whole and peninsular India will peak around 2020 while hinterland India will peak later around 2040,” reads the survey report.

Unlike two other emerging economies, Brazil and China, India’s working age (WA) population to non-working age (NWA) population is likely to peak at 1.7. The two other countries had much higher levels at peak which lasted at least 25 years. But India’s peak plateau period would last longer than other countries.

The differing trend would also set a different profile for India’s economic growth as compared to the East Asian tiger economies. The survey authors note, “India should not expect to see growth surges or growth decelerations of the magnitudes experienced by the East Asian countries.

The regional variation within the country too would have its consequences for the nature of economic growth. The working age ratio of most peninsular states is likely peak at levels lower than seen in East Asia. In contrast, the hinterland states will remain relatively young and dynamic, characterised by a rising working age population for some time. This prolonged demographic dividend in the ‘hinterland’ would provide the poorer states help in catching with others and lead to faster convergence of income levels across states.

Bihar, Jammu and Kashmir, Haryana, and Maharashtra could expect a greater demographic dividend over coming years while that for Kerala, Madhya Pradesh, Chhattisgarh, and West Bengal will suffer from a relatively low for their level of income.