Introduction

Demographic Dividend is a phenomenon which occurs when the proportion of working population out of the total population is high. According to the United Nations Population Fund (UNFP), it simply means, “the economic growth potential resulting from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the share of non-working-age population (14 and younger, and 65 and older).”
A country is expected to reap the demographic dividend when the share of its working population is larger than the share of its non-working population. India is currently going through a phase of the demographic dividend. As per the population research carried out by the United Nations (UN), the countries located in Latin America and Asia are reaping the maximum benefit of the demographic dividend. The developed countries have had their peak times and now their percentage of the dependency ratio is high (Dependency ratio can be defined as the ratio of the non-working and working population). Further, China’s one child policy reversed the demographic dividend it reaped since the 1960s. Dependency ratio will remain high due to factors like
>> Ageing population
>> Low birth rate
>> High Life expectancy
>> Low death rate

Demographic Dividend and Development

To reap the benefits of the demographic dividend, countries have to take some special measures that are aimed at economic development and better living standards. They need to invest in the following to get the maximum benefits of Demographic Dividend:
>> Health and Security
>> Education
>> Employment generation
>> Social security
The peak of the demographic dividend is approaching fast for India. This peak will be reached in the early 2020s for India as a whole; peninsular India will peak around 2020 while hinterland India will peak later (around 2040). This presents an overall good window of opportunity for states in the hinterland in comparison to peninsular India.Failing to act on time can result in unemployment and imbalance in the economy.

Optimism vs Pessimism

Experts with optimistic views are confident in India's demographic dividend because of the fact that India's dependency ratio, as measured by the share of the young and the elderly as a fraction of the population, will come down more sharply in the coming decades. More working age people will mean more workers, especially in the productive age groups, more incomes, more savings, more capital per worker, and more growth. Also, because demographic change is associated with fertility declines, the transition period may be accompanied by greater female participation in the labour force

As per the IMF, every fast-growing Asian economy in recent years has accelerated as it underwent a demographic transition. In lndia itself, the high growth states (Tamil Nadu, Karnataka, and Gujarat) in the period 1991-2001 had a dependency ratio which was 8.7 percentage points lower than that of the low growth states (Bihar, Madhya Pradesh, and Uttar Pradesh) and an average annual growth rate that was 4.3 percentage points higher. Looking ahead, the low growth states will benefit more from the demographic dividend, as higher incomes and lower fertility alter demographics. Indeed, over the period 2001-11, the hitherto laggard states have grown at an average of around 5 per cent annually. The difference between their growth and that of the leaders in the period 2001-11 is just 1.5 percentage. So demographic transition seems to be correlated with growth, with some reasons to believe that causality flows both ways i.e., lower dependency ratios increase growth and higher growth reduces fertility and consequently dependency ratios.
These optimists point to another reason for cheer. Cross-country evidence suggest that productivity is an increasing function of age, with the age group 40-49 being the most productive because of work experience • Nearly half the additions to the Indian labour force over the period 2011-30 will be in the age group 30-49, even while the share of this group in China, Korea, and the United States will be declining. That India will be expanding its most productive cohorts even while most developed countries and some developing countries like China will be contracting theirs in the coming decades can be another source of advantage.

However, the as pessimists are not convinced. A larger workforce translates into more workers only if there are productive jobs for it. Will there be enough productive jobs? One way to make progress in answering this question is to understand the commonalities as well as the differences between India's growth path and that of other populous fast growing Asian economies. By comparing where India is today, with where those countries were at similar stages in their development, as well as by looking at what they did next, we might get a better perspective on what India might need to do. Of course, any such analysis has to be accompanied by two important caveats-
(i) First, countries differ and do not necessarily follow similar trajectories
(ii) Second, the global environment has changed.
The opportunities India faces now are different from those that previous fast growers faced when they were at a similar stage of development. Thus, blindly replicating their trajectory may be unwise