Statsguru: Young India yet to tap demographic dividend, needs a policy push

Since 2019, India has been enjoying demographic dividend – its young population (15-64 years) is larger than children and elderly (more than 64 years). The country has so far not been able to fully tap this dividend, and it has another 30 years or so to frame policies in sync with this demography.

 

Among the countries having demographic dividend, India is a noticeable exception that has not harnessed this human resource (Chart 1). 

 

In terms of average gross domestic product (GDP) growth during this demographic dividend period, India has recorded an average annual growth rate of 6.2 per cent, placing itself ahead of most nations. However, it trails China and Vietnam (Chart 2).

 

 

India’s per-capita GDP explains the burden of burgeoning population even if it is young (Chart 3).

 

 

India has made limited progress in the structural transformation of employment across sectors, highlighting failure to fully leverage its demographic dividends vis-à-vis other countries (Chart 4).

 

 

Labour productivity offers further insight into how effectively a country uses its workforce. India’s productivity rose modestly from $5,413 at the start of its dividend phase to $6,209 in 2025, the lowest among peers (Chart 5).

 

 

Education plays a foundational role in transforming demographic advantage into economic success. In this regard, India’s literacy rate, at 77 per cent as of 2023, remains considerably lower than the rates for other countries that have successfully capitalised on their demographic dividends (Chart 6).