Harvard prof David Bloom says only proper policies will yield demographic dividend youth power that translates to wealth. The greater the number of earning youth, more the savings, faster the economic growth, higher the per capita income and quicker the reduction of poverty, said David Bloom, professor of economics and demography at Harvard University.
Speaking at the India Today Conclave 2010, he said the lessons learnt from the Chinese and East Asian - Taiwan, Singapore, Hong Kong and South Korea - success stories could become the mantra for India's economic growth provided its youth power was properly harnessed.
He told the audience, which included a very attentive Congress general secretary Rahul Gandhi, that India's growing population, always considered a bane, can be the engine for economic growth that could last a good 30 years.
The Bloom formula to achieve this is to equip the enormous pool of workers - the population in the age group of 15 to 65 - available in India, by providing them employment to 'catalyse growth'. In addition, India had to dramatically improve education and rural healthcare to ensure the kind of growth East Asia saw in the last three decades.
Bloom is the originator of the term 'demographic dividend', used to denote a rise in the rate of economic growth of a country resulting from a large share of working - age people in the population.
Based on this demographic dividend theory, India is considered to be on the threshold of a great opportunity to have extraordinarily high economic growth, as the country has one of the youngest populations in the world. In fact, the average age of the Indian in 2020 is likely to be 29, as against 37 for China and the US, and 48 for Japan.
Bloom predicted, "India is reaping a high demographic dividend. India will reach higher than East Asia's three - decade growth rate if the country's fertility rates are low or medium and be about on par if the fertility rates are high." The theory is that with a higher working - age population and fewer dependents - those who are aged below 15 or above 65 and are not earning - there will be bigger savings and more income per household to power higher economic growth.
Currently, India's dependency ratio - of non-workers vs workers in a household - is 0.6. According to reports, the number of workers in India is 67.2 crore against 40.8 crore non - workers in a total population of 108 crore. India is moving from higher fertility and high mortality to low fertility and low mortality, the Harvard professor said. This is a transitional phase.
Studies show that India's fertility rate, which is the average number of children a woman expects to have, was 3.8 in 1990. It has fallen to 2.7, according to Bloom.
"The extent of growth and reaping of this demographic dividend is not set in stone. It can be magnified in several ways. The number of kids per woman can come down from 2.7 to 2.1 through expansion of family planning and better healthcare through the National Rural Health Mission," he said.
Bloom, however, warned that there was potential for this burgeoning youth population to turn into either a dividend or a disaster.
Against the backdrop of a low mortality rate combined with a baby boom, India had to make sure that its children were healthy and educated and went on to add to India's economic growth.
As Rahul Gandhi listened intently, Bloom stressed the need for policies to improve public health. This would mean vaccination for children, better rural life and education aimed especially at the girl child, to turn this young population into a dividend.
Quoting IT czar Nandan Nilekani, the Harvard professor said India had a great opportunity and should not 'mess it up'.
"Growth depends on an economy's ability to absorb the demographic dividend. Pure demographics suggest that the next three decades will be catch - up time for India (with East Asia) with high per capita incomes," he said.
Bloom explained why those above 65 years should be looked after as well. He said that by 2050, this section of the population would number over 22 crore. The private family networks would not be able to provide them the kind of care they needed. "India will have to evolve pension and healthcare policies for them," he suggested.
He pointed out that 90 per cent do not receive pension and less than 10 per cent have medical insurance. Bloom explained the demographic dividend with the figurative use of 'a pig in a python' concept.
If a python swallows a pig, the bulge in the python's body is taken to represent the population in a particular age group.
The bulge starts at children, moves along the python's body and when the bulge is biggest at the working-age people, that marks the highest period of economic growth for the country.
"The dependency ratio in East Asia of working people vs nonworkers is more than 2.3: 1, while in sub-Saharan Africa, it is 1.2: 1. So in East Asia, there is an extra member in each family for every non-worker, which translates into larger income per household," he explained.
India has reached the stage of reaping the demographic dividend as a result of several factors, according to Bloom. "Since the 1950s, India has seen a 70 per cent decline in infant mortality, added a quite extraordinary 25 years -four - and - a - half years per decade - to life expectancy, reduced fertility from six kids per woman to 2.7, while death and birth rates are on a decline," he said.
India will reach higher than East Asia's three decade growth rate.
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