India’s demographic dividend

The whole world is now going gaga on India’s demographic dividend. While the developed countries are aging, India is becoming younger. Add to this the growing acceptability of India as a country, the evolution and success of the educated middle class, and the general positive attitude in the country — and it makes India a potent force to bridge the global skill gap.

I read a report that there will be a global gap of 50 million skilled workforce, and if India plays its cards well — it can well fill 45 million of them. That can be game-changing.

Like any analysis, it looks good on the drawing board. But when we look at how we can convert the potential into reality, all the demons of implementation raise their heads

A first step may be to go below the hood and see where these potential democratic dividends are. As I mentioned in one of my previous blogs, I feel that over the last 18 years, India has moved beyond its traditional dual demographic profile (the rich and powerful, and the poor — among whom some were relatively well off), to the emergence of a third category — urban, educated middle class.

Now if we look at these three groups as the potential source of the so-called 45 million, the rich and powerful do not qualify. Apart from the fact that the numbers are not going to come from them, many of the skills and capabilities are contextual to the geography as well as the social ecosystem, and cannot be moved across borders. In any case, there is no compelling reason for them to move beyond their current cradle of success.

The second group of the urban, middle class — which has both aspiration as well skills. However, the bottleneck will again be the magnitude of the gap we are looking at, as well as the fact that many of them will already be comfortable in what they are doing, and may not have the desire to bridge the global skill gap to achieve a higher standard of living.

So the numbers, if really, have to come from the youth who are yet to be touched by the economic liberalization. But how will they be part of the party?

Before we get into discussing how maybe a bit of history will be good. Why they did not get the benefit in the first place?

Over the last fifteen years, India’s growth has primarily been in the services sector — IT, ITES, Media & Entertainment, Banking & Financial services etc. People who benefited are the ones who are urban middle class — the primary differentiators being formal education and knowledge of English.

And the rural poor missed out on this. The situation has not fundamentally changed over time, though the jobs have moved from metros to cities to small towns. As the global skill gap worsens, we will soon exhaust the pool of formally educated, English-speaking people that exist in urban/ semi-urban India, as they will total only a handful of millions.

So how do we leverage the humongous potential, before someone like China comes and mop it up? The only way is leveraging the vast majority. And the only way to do that is to educate them — both formally and vocationally.