Demographic Transition and Dividend in India
Indian Economy
- PYQs8
- Articles1
Background
Understanding India's demographic profile is crucial for policy formulation in areas like economic planning, social welfare, healthcare, education, and labor markets. The demographic dividend presents an opportunity, while an ageing population poses significant challenges requiring proactive governance.
Demographic transition is a model describing population change over time, involving shifts from high birth and death rates to low rates, typically in four stages. The demographic dividend refers to the economic growth potential that can result from shifts in a population's age structure, primarily when the share of the working-age population (15 to 64 years) is larger than the non-working-age share.
Facts & tables
- Total Fertility Rate (TFR)
- Dropped to 1.9, below the replacement level of 2.1.
- Crude Birth and Death Rates
- Birth rate fell from 21 (2014) to 18.3 (2024); death rate marginally from 6.7 to 6.4.
- Demographic Dividend Window
- India's median age is 29.2 years, with over 65% of the population below 35 years, indicating a young workforce.
- Health Indicators
- Life expectancy at birth is 72 years; Infant Mortality Rate (IMR) has fallen to 24.
| Type | Reference |
|---|---|
| Conceptual area | Social Justice & Development |
| Conceptual area | Welfare Schemes & Social Policies |
| Conceptual area | Labor & Demographic Economics |
| Body | Role |
|---|---|
| Sample Registration System (SRS) | Provides data for demographic analysis |
Prelims angle
Prelims angle: Factual recall
Prelims angle: Multi-statement analysis
- India's TFR is 1.9, below replacement level (2.1).
- Slowing population growth, but still a young population (median age 29.2).
- Demographic dividend window is open but requires strategic planning.
- Future challenge: impending ageing population and shrinking workforce.
- Significant rural/urban and regional disparities in demographic indicators persist.
| Year | Framing tags |
|---|---|
| 2024 | Factual recall, Multi-statement analysis |
| 2022 | Multi-statement analysis, Conceptual understanding |
| 2022 | Multi-statement analysis, Factual recall |
| 2021 | Multi-statement analysis, Factual recall |
| 2020 | Multi-statement analysis, Conceptual understanding |
| 2019 | Multi-statement analysis, Factual recall |
| 2016 | Multi-statement analysis, Factual recall |
| 2013 | Policy measures, Conceptual understanding |
Timeline
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Social Justice & Development
Conceptual area
-
Welfare Schemes & Social Policies
Conceptual area
-
Labor & Demographic Economics
Conceptual area
-
Prelims 2013
Policy measures, Conceptual understanding
-
Prelims 2016
Multi-statement analysis, Factual recall
-
Prelims 2019
Multi-statement analysis, Factual recall
-
Prelims 2020
Multi-statement analysis, Conceptual understanding
-
Prelims 2021
Multi-statement analysis, Factual recall
-
Prelims 2022
Multi-statement analysis, Conceptual understanding
-
Prelims 2022
Multi-statement analysis, Factual recall
-
Prelims 2024
Factual recall, Multi-statement analysis
-
From black to grey: on the Sample Registration System – Statistical Report, 2024
India is currently in a crucial phase of its demographic transition, marked by a significant decline in fertility rates below replacement levels and a slowing population growth. While this presents an opportunity to harness the demographic dividend from its large young workforce, the country must simultaneously prepare for the impending challenges of an ageing population and address persistent regional and rural-urban disparities in health and demographic indicators.
See also
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Past papers
2013–2024 · 7 questions
In the news
From black to grey: on the Sample Registration System – Statistical Report, 2024
India is currently in a crucial phase of its demographic transition, marked by a significant decline in fertility rates below replacement levels and a slowing population growth. While this presents an opportunity to harness the demographic dividend from its large young workforce, the country must simultaneously prepare for the impending challenges of an ageing population and address persistent regional and rural-urban disparities in health and demographic indicators.
Try these PYQs
Consider the following countries :
1. Italy
2. Japan
3. Nigeria
4. South Korea
5. South Africa
Which of the above countries are frequently mentioned in the media for their low birth rates, or ageing population or declining population?
* Italy and Japan are often cited as prime examples of countries with rapidly ageing populations and very low birth rates. Both countries have been grappling with the economic and social consequences of these demographic trends for several years. * South Korea has also emerged as a country with significant demographic concerns. Its fertility rate is one of the lowest in the world, and its population is projected to start declining in the coming years. * Nigeria and South Africa, while facing their own set of demographic challenges, are generally not highlighted for low birth rates or declining populations. Nigeria has a very young and rapidly growing population. South Africa’s population growth has slowed in recent years, but it is not yet experiencing a decline.
Which of the following statements is/are correct regarding the Maternity Benefit (Amendment) Act, 2017?
1. Pregnant women are entitled for three months pre-delivery and three months post-delivery paid leave.
2. Enterprises with crèches must allow the mother minimum six crèche visits daily.
3. Women with two children get reduced entitlements.
Select the correct answer using the code given below:
The Maternity Benefit (Amendment) Act 2017 has made several significant changes to benefit women employees - Paid maternity leave has been increased to 26 weeks from 12 weeks. - For women expecting after having 2 children, the leave duration remains at 12 weeks. - Establishments employing 50 or more employees must provide a crche facility, and women employees should be allowed to visit the facility 4 times during the day.
Which of the following is/are the indicator/indicators used by IFPRI to compute the Global Hunger Index Report?
1. Undernourishment
2. Child stunting
3. Child mortality
Select the correct answer using the code given below:
All three indicators (1, 2, and 3) are used by IFPRI (International Food Policy Research Institute) to compute the Global Hunger Index Report. The Global Hunger Index (GHI) is a tool designed to comprehensively measure and track hunger at global, regional, and national levels. It's a peer-reviewed annual report, now jointly published by Concern Worldwide and Welthungerhilfe. Purpose: To assess hunger severity and track progress towards ending hunger. Each country's GHI score is calculated based on a formula that combines four indicators that together capture the multidimensional nature of hunger - Undernourishment - The share of the population whose caloric intake is insufficient; - Child Stunting - The share of children under the age of five who have low height for their age, reflecting chronic undernutrition; - Child Wasting - The share of children under the age of five who have low weight for their height, reflecting acute undernutrition; and - Child Mortality - The share of children who die before their fifth birthday, reflecting in part the fatal mix of inadequate nutrition and unhealthy environments. Hence, option C is the correct answer.
With reference to the Indian economy, consider the following statements:
1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.
2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.
3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy dollars.
Which of the statements given below is/are correct?
Statement 1 is incorrect. Typically, the RBI uses open market operations to sell government securities to drain money from the system and control inflation. Buying government securities would inject money into the system, potentially fueling inflation further. Statement 2 is correct. Selling dollars in the market - If the rupee is rapidly depreciating, the RBI might intervene in the foreign exchange market by selling dollars from its reserves. This increased supply of dollars in the market can help stabilize the exchange rate and slow down the depreciation of the rupee. Statement 3 is correct. Lower interest rates in the US/EU make India a more attractive destination for foreign investment, leading to a large inflow of dollars. This causes the rupee to strengthen (appreciate). To prevent the rupee from appreciating too rapidly and hurting exporters, the RBI buys the excess dollars from the market.
To obtain full benefits of demographic dividend, what should India do?
To rip the maximum demographic dividend, India has to promote skill development. This is what the Economic Survey and 12th FYP have been advocating.
Show 3 more PYQs
With reference of the Indian economy after the 1991 economic liberalization, consider the following statements:
1. Worker productivity (per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
2. The percentage share of rural areas in the workforce steadily increased.
3. In rural areas, the growth in non-farm economy increased.
4. The growth rate in rural employment decreased.
Which of the statements given above is/are correct?
Statement 1 is incorrect. After the 1991 economic liberalization, worker productivity increased both in urban and rural areas. While urban areas experienced higher growth, rural areas also saw improvements, especially with the rise in non-farm activities. Statement 2 is incorrect. The percentage share of rural areas in the workforce has steadily decreased since liberalization. This is because more people have moved to urban areas for employment in the industrial and service sectors, contributing to the growing urban workforce. Statement 3 is correct. In rural areas, the growth of the non-farm economy increased significantly. With liberalization, the diversification of rural economies into sectors like manufacturing, construction, and services grew, reducing the dependency on agriculture. Statement 4 is correct. The growth rate in rural employment decreased after 1991. While the rural economy diversified, the agricultural sector did not provide enough employment opportunities to absorb all the labor, leading to lower growth in rural employment. Hence, option B is the correct answer.
Consider the following statements:
1. Vietnam has been one of the fastest growing economies in the world in recent years.
2. Vietnam is led by a multi-party political system.
3. Vietnam's economic growth is linked to its integration with global supply chains and focus on exports.
4. For a long time, Vietnam's low labor costs and stable exchange rates have attracted global manufacturers.
5. Vietnam has the most productive e-service sector in the Indo-Pacific region.
Which of the statements given above are correct?
Statements 1 and 3 are correct. Vietnam’s open economic policy of recent years integrating into global supply chains has made the growth success story possible. Vietnam's export-led growth strategy and global integration are among the key factors behind the country's remarkable achievements in growth and poverty. Vietnam was one among the few countries to post GDP growth rate figures in 2020 when the pandemic hit. Vietnam is projected to be the fastest-growing internet economy in Southeast Asia in the next 10 years. Statement 2 is not correct. Vietnam is a one-party communist state, not a multi-party parliamentary democracy. Statement 4 is correct. Thanks to an abundance of low-wage labour, Vietnam's manufacturing sector grew at a compound annual growth in the last decade. As the rest of East Asia developed and wages there rose, global manufacturers were lured by Vietnam's low labour costs and stable exchange rate. Hence, Statement 5 is not correct. According to the Asian Development Bank Report, e-services including digital financial services are at a very nascent stage in Vietnam.
With reference to the casual workers employed in India, consider the following statements:
1. All casual workers are entitled for Employees Provident Fund coverage.
2. All casual workers are entitled for regular working hours and overtime payment.
3. The government can by a notification specify that an establishment or industry shall pay wages only through its bank account.
Which of the above statements are correct?
Statement 1 is not correct: The Government had launched a scheme viz Casual Labourers (Grant of Temporary Status and Regularization) Scheme of Government of India, 1993. As per the scheme, Temporary status would be conferred on all casual labourers who were in employment and who have rendered a continuous service of at least one year, which means that they must have been engaged for at least 240 days (206 days in case of offices observing 5 days week). Statement 2 is correct: The Supreme Court has decreed that casual workers are also entitled to social security benefits as stipulated in the Employees Provident Funds and Miscellaneous Provisions Act. The Court's ruling stemmed from its interpretation of Section 2(f) of the EPF Act, wherein the definition of an "employee" encompasses a broad scope, including any individual engaged directly or indirectly in connection with an establishment's work and receiving wages. A bench of the Supreme Court affirmed this viewpoint. Statement 3 is correct: The government has the authority to specify through a notification that an establishment or industry is obligated to disburse wages exclusively via its bank account.