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The Flipside Of India's Demographic Dividend

22/04/2016 8:14 AM IST | Updated 15/07/2016 8:26 AM IST
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LALITPUR, January 11, 2016 : Indian seasonal migrant laborers carry raw bricks at a brick factory in Harisidhhi, Lalitpur, Nepal, January 11, 2016. Thousands of migrant laborers from India and Nepal arrived in Nepal to work. The demand for bricks is high in Kathmandu after more than 30 million houses were damaged due to the 2015 April Earthquake. (Xinhua/Pratap Thapa via Getty Images)

Bloomberg recently published an opinion piece that explores if "India Will Struggle to Cash In on Its Demographics". It's a fascinating piece that draws facts from a variety of sources and I encourage you to read it. Some of the facts presented in that piece speak volumes about the situation India finds itself in:

• India's women work force participation rate at 28.6% is less than that of Turkey (32%), Nigeria (49%), Bangladesh (60%) and China (70.4%).

• Since 1991, when India initiated the economic reform process, share of wage and salary workers in the total workforce has increased from 12.5% in 1991 to 20% in 2014. China in comparison has more than doubled that ratio from 25% to 55% in the same time period. It implies we have not created enough regular jobs in the last 25 years and have fallen behind our peers.

• The more interesting aspect of the growth in India's wage and salary workers is that almost all of the growth has come from high-skill occupations--the rate of job creation in low- and medium-skill occupations has grown at the same rate as that of total workforce increase.

India dominates the world's poorest 10% while China dominates the middle class and the US dominates the world's rich.

The reasons for the above are fairly simple. One, Indian society is still evolving with regards to the role of women in the workforce. Second, India missed the industrial revolution that creates employment for millions of low- and medium-skill workers. India instead moved on to become one of the emerging leaders in the service/knowledge economy where only a few with good education and high skills prosper. This reflects in India's enormous income equality gap, which is larger than all the advanced economies. As a result, a large number of the low-skill poor remain on the sidelines and India dominates the world's poorest 10% while China dominates the middle class and the US dominates the world's rich.

This economic and opportunity gap has profound effects not just on the national economy but also on the overall society. As metro areas in major cities have become economic hubs for the service economy, the populations in those areas have prospered. People living in these cities are westernized and more liberal in their worldview. However, huge swathes of the country--including large parts of Karnataka, which is at the forefront of the service economy thanks to Bangalore--remain poor, uneducated, underemployed and stuck in primitive social strife. These two segments of the population continue to drift apart in the absence of opportunity in the countryside.

I submit that we can trace the root cause of almost all riots, social problems and issues to the lack of jobs.

This divide also reflects in how we as a nation collectively, along with the media, react to events. Take for example two events which are fundamentally about freedom and choice:

When the BJP government in Maharashtra decided to enforce an existing law that restricts beef consumption during a certain period holy to a certain section of the population in March last year, the mainstream media and intellectuals mounted a vigorous protest against people's fundamental right to choose what they want to eat. Petitions were filed.

On the other hand, the recent prohibition on alcohol in Kerala and Bihar has generated no such eruption or protest except a few jokes and derision. The reason is fairly simple--Bihar and Kerala do not matter to the upper-class elites who dominate the media and social media chatter. Worst affected by an alcohol ban are the poor, and the poor have no voice except that they vote every once in a while.

Hundreds of people die year after year due to stampedes, fires and utter lack of crowd management in religious events/places but no one cares about that. There are no calls for accountability. It's mostly the poor who go to these crowded events in the hope of turning around their lives; they are the ones who die. On the other hand, regulatory changes with regards to private taxis in Delhi generate more chatter across the spectrum as it inconveniences a few commuters in the city.

Demographics are both India's biggest strength and its biggest vulnerability...

This apathy perpetuates the divide and creates a vicious loop where the urban India can no longer relate to what happens in the countryside.

Coming back to jobs--I submit that we can trace the root cause of almost all riots, social problems and issues to the lack of jobs. We have an enormous and growing working age population but we are not creating enough jobs for them. When young people do not have economic opportunities, or worse, any hope of gainful employment, its easy to get swayed by politicians' lofty promises of reservations or government jobs through creation of new states. It is easy to seek solace in religious and regional extremism and resort to violence as means to exact revenge on the system.

The only way to bridge the gap is to focus on job creation especially in the low- and medium-skills sectors, invest in education and rural infrastructure and lead a grassroots-level social reform movement across all religions and cultures. The media can play an important role in that by keeping faith with the fundamental principles of freedom and fair reporting rather than by resorting to sensationalism and reporting opinions as news.

Demographics are both India's biggest strength and its biggest vulnerability-I hope our politics and society evolve enough to deliver on the strength rather than let the vulnerabilities define issues in the coming decades.

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