“While India may not succeed 100 percent, it will certainly do what it takes to ensure that a golden opportunity for a demographic dividend doesn't pass it by"
The prospect seemed unthinkable. Now it’s inevitable. Soon a fifth of the planet's people will be in India. The challenges this poses are daunting: infrastructure, urbanization and economic development models for such a vast demographic leap. Foremost requirement: job opportunities for 150 million Indians joining the labor force by 2030. India has leapfrogged from an agrarian to a services-based economy, skipping manufacturing. A model with benefits, but only for a small number of skilled workers. India could develop its world-class service sector for highly productive employment. But productivity gains are reduced to a few sectors such as IT, an industry that employs 3 million people --0.4% of the workforce--. The vast majority of Indians do low-productivity jobs in agriculture, transportation, construction or the informal sector. Labor-intensive manufacturing is crucial to capitalize on a growing population. "Every economy in Asia that has successfully moved beyond low or lower-middle income status has done so by first establishing a thriving manufacturing sector", argues Shilan Shah, an economist at Capital Economics. "Demographic factors can support growth, but they do not determine outcomes. Productivity growth does". Economists believe India has the potential to reap a major "demographic dividend". But it’s not guaranteed. If does not make the right investments, diversifying its economy and improving the quality of education, the demographic dividend could turn into demographic disaster. Policymakers face the daunting task of providing basic services to an ever-increasing number of people. India struggles to provide health care, water, electricity and shelter to its masses. "Some years down the road, when the population has grown even larger, this challenge will prove even more immense", says Michael Kugelman (Woodrow Wilson Center for Scholars). There are also huge urbanization challenges. Indian cities have grown tremendously in population and size: housing shortages, traffic congestion, air pollution and poor public health are mounting problems. An inability to capitalize on the demographic dividend would have unmeasurable negative social and political implications.