The state of the Indian Economy is right now best described as worrisome and the latest macroeconomic figures are anything but a reassurance. Dipping growth, shrinking core sectors, rising inflation with even higher unemployment is what in economic theory is defined to be a stagflation or recession-inflationary territory, even though there are arguments on both sides for this phenomenon in the Indian context. As much as this situation is of high regard, one must not lose sight of the long term economic goals. And here is when the demographic dividend comes to play. I am quite confident that my generation and even before ours, our schools have taught how India being a young, populous country is capable of reaping dividends from her demographics, thereby catapulting the economy into a high growth trajectory and better developmental prospects. So, what exactly happened to the “dividend”? Did we miss the bus? Is there still hope for the large population to not be an even larger burden on our limited resources? Well, for starters India is not the first (and perhaps not the last) to have the opportunity of the demographic dividend.
The United Nations Population Fund (UNFPA) defines demographic dividend as
the economic growth potential that can result from shifts in the population’s age structure, mainly when the share of the working age population (15 to 64) is larger than the non-working share of the population ( 14 and younger, and 65 and older).
This typically happens with the demographic transition, with the total fertility rate (number of live births per fertile woman) dipping; which essentially results in smaller families, more investment per child, women having more time to work which was earlier spent in child rearing- leading them to participate in the economy and joining the labour force.
In the Indian scenario, close to 67% of the population lies in the age bracket of 15-64; the working population, the aspiring and ambitious block of the economy. The UNFP says the necessary investments to reap the demographic dividend lies in building capabilities of people and ensuring their rights and freedoms to achieve their potential. The two major areas which have the potential to build such capabilities are the sectors of health and education. I will restrict the article to these two specific areas which I believe need urgent attention. A healthy and educated population (at large) will be more effective while participating in the economy.
Healthcare- The public health system is a tiered structure-
The sadder fact is that only 11% sub-centres, 13% PHCs and 16% CHCs meet the Indian Public Health Standards. There is an 82% shortfall in total surgeons, obstetricians and gynaecologists, physicians, and paediatricians across CHCs in India, according to the government’s Rural Health Statistics 2017. If you have ever had the luck to visit a government hospital, I do not need to elaborate on the state of infrastructure and human capital. A Lancet report had concluded that some 2.4million Indians die every year due to poor health facilities, even though their conditions are treatable, making India the worst among 136 nations. Public Health Foundation India, Delhi had commented saying that, “We need to better measure the quality of our health system as a composite entity rather than be merely content with certifying hospitals and laboratories.”
The paltry public expenditure on the health sector makes things more difficult. India spent 1.02% of her GDP on peoples’ health, as per the National Heath Profile, 2018- resulting in even lower per capita public expenditure on healthcare. The government intends to spend 2.5% of the GDP by 2025 which is less than half of the global average of 6%. According to WHO’s health financing report, approximately 68% of medical expenses is done out of pocket in India, while the global average is about 18%. This low public expenditure is pushing 7% of the population below the poverty line, every year; as they meet medical expenses out of their pocket and unfortunately, this trend hasn’t changed much in the last decade. In between 2001 and 2015, 0.38 million Indians committed suicide as they failed to access and afford healthcare services. There is an immediate need to increase public expenditure on health care to 5% of GDP.
On the supply side of services, India has a severe shortage of doctors, nurses and other staff in most public hospitals. By 2030, India would demand close to 20, 70,000 doctors to be effective to the population and reach The World Health Organization’s standard ratio of doctors to patients of 1:1000 which in India, on an average, is 1:11,082. A Down To Earth article says that-
As of March 31, 2017, the country had a shortfall of 10,112 female health workers at primary health centres, 11,712 female health assistants, 15,592 male health assistants and more than 6,1000 female health workers and auxiliary nurse midwives at sub-centres. In fact, primary health centres across the country are in want of at least 3,000 doctors with 1,974 such centres operating without a single doctor. In community health centres, there is a shortfall of close to 5,000 surgeons.India’s health workforce crisis- Lalit Maurya & Subhojit Goswami.
Clearly, we need more doctors yet in between 2006 and 2017, the number of medical seats has increased from 256 to 479, out of which 259 is in the private sector. The Union Health Ministry had to bar 82 of these institutions from the admissions process (2018-19) due to various issues ranging from inadequate teaching capacity and infrastructural problems, fees etc. The multi-faceted problems of the sector perhaps have a root cause- sub-optimal government expenditure. Lesser public spending correlates to lesser spending by hospitals across the spectrum explaining the shortage of staff, equipment, deliverables and the system’s overall sorry state of affairs; as the dangers of the unregulated private sector looms.
Education & Employability- India has a window of 37 years to reap her demographic dividend but the key to the treasure is a simple fact- the workable population should be working. However, with record high unemployment rates plaguing the society, it is important to understand the underlying causes of the problem. Starting from the bottom of the pyramid- primary education; according to the Annual State of Education Report (ASER) 2018 by Pratham points to some grim realities-
a. While there has been an improvement in infrastructure- playgrounds, drinking water facility, toilets, student-teacher ratio etc., the gap between private and public education has widened- 29% of rural students are willing to pay more and shift to private school.
b. There has also been a steady increase in availing private tuitions for children.
c. Among children enrolled in government schools, the percentage of class V children able to read even class II level text book has shown a marked decline from 50.3 per cent (2009) to 43.8 per cent in 2011. In 2013 only 41.1 per cent students of class V could manage to read even standard II text books.
d. In government schools, nearly 21 per cent students of class V can do division of lower class whereas it is nearly 40 per cent in private schools.
Interestingly, the Draft National Education Policy (NEP), 2019 wants to increase public spending in education to 6% of GDP and this figure was recommended by the NEP of 1968 and reiterated by the NEP of 1986. A mere 2.7% of the GDP was spent on education during the 2017-18 fiscal and the very recent cuts in education funds and research is the cherry on the top. The opportunity of a demographic dividend comes once during a country’s demographic journey- time is crucial and for India, it is not utilizing this window. As I have written earlier, women have a major role in this process, yet as per The OECD Economic Survey for India, the country has the largest difference (52%) between employment rates between men and women. The Report also criticized the Union Government’s failure to publish comprehensive data regularly.
There are also various other issues like that of malnutrition, the severe lack of skills amongst the employable population, structural problems on women’s safety, questions on the quality of jobs, climate and environment, amongst many, many other things. At the end of the day, all of these individual problems are together affecting India’s economy. With the domestic sector pretty much stalled and as the US-Iran escalation unfolds itself (which has obvious ramifications for our economy), the choice of whether or not to build the bridge of reforms which will save the car from an imminent crash is more than obvious. It is high time that the focus goes back to where it matters- the economy which impacts all of India, all of her people and their livelihoods. Remember, India does not have the luxury of time if we are to reap at least some of our potential demographic dividend.