Despite youth edge, India loses out to S-E Asia rivals

  • HT Correspondent, Hindustan Times, New Delhi
  • Updated: Jul 10, 2014 15:29 IST

India will quickly squander its enviable “demographic dividend” — or its sizable working-age population — if it doesn’t create enough jobs, the economic survey said.

“Demographic advantage is unlikely to last indefinitely. Therefore, timely action to make people healthy, educated, and adequately skilled is of paramount importance.”

Nearly two-thirds of Indians are below 35 years of age, which gives the country a unique advantage over most emerging economies. If harnessed, more young people mean more workers (especially in the productive age groups), better incomes, higher savings rates and more growth.

However, the country’s longest spell of low growth and poor human development indicators mean this opportunity could simply pass by, the budget-eve document said.

“The economic survey 2013-14 conveys a sense of urgency about the course the economy needs to undertake,” the survey’s lead author, finance secretary Arvind Mayaram wrote in the foreword of the report.

Shaped by higher fertility rates, once seen as a curse and curbed through “forced sterilisation”, India’s demographic opportunities now look providential. Nearly half those entering the Indian labour force between 2011-30 will be in the age group 30-49, considered the most productive, while the share of this group will be declining in China, Korea and the US.

However, this advantage isn’t being leveraged. As production costs rise in China, business and investments are shifting to countries such as Vietnam and Indonesia. When clothing firms wanted to move their sourcing out of China, they chose countries such as Bangladesh and Cambodia, not India.

The survey notes that countries such as China, Egypt, Indonesia, South Africa, and Vietnam within the same category have better overall rankings. Such poor indicators ultimately hurt workforce quality.

Reforms are needed on three fronts to add jobs: stabilising inflation, curbing the fiscal deficit and creating an investment friendly legal and regulatory framework.

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