Demographic Dividend or Nightmare?
Is an enormous demographic dividend cheque in the mail for India? Is it pre-ordained that a young nation is destined to harvest the benefits of favourable demographics even if it does nothing? Or is there a demographic nightmare looming on the horizon? Our prime minister said, “Our youth can be an asset only if we invest in their capabilities. A knowledge-driven generation will be an asset. Denied this investment, it will become a social and economic liability.” (August 2, 2005, launch of the National Knowledge Commission).
We are not doing enough to skill and train our youth. How will they be ready for gainful employment? There is a need here to move the needle quickly. Admittedly, it is a daunting and gigantic task. The Preamble to the government of India’s skill building initiative says: “Potentially, the target group for skill development comprises all those in the labour force, including those entering the labour market for the first time (12.8 million annually), those employed in the organised sector (26.0 million) and those working in the unorganised sector (433 million) in 2004-05. The current capacity of the skill development programmes is 3.1 million. India has set a target of skilling 500 million people by 2022.”
Skill enhancement of 500 million people by 2022 is a herculean task. It continues to boggle the minds of the smartest planners. There is no silver bullet for this really important and complex issue. I will try to highlight a few sectors in which skill building and vocational training will act as a force multiplier.
Healthcare and family welfare: Our public spend on healthcare today is about 2.5 per cent of GDP but if one aggregates it with private sector expenditure, it is somewhere between 5.5 per cent and 6 per cent. That, in part, accounts for our ranking of 119 in the UNDP Human Development Index. If we look at the CII report on skill building, it is estimated that we will need 20.7 million additional healthcare workers in a projection of 300 million skilled workers by 2022. The government’s target is higher at 500 million in the same time frame. Doctors, nurses, paramedics, health assistants and village health workers will form the bulk of this workforce. With a rapidly ageing population in Japan, Europe and North America, many of these workers will augment the globally mobile workforce through innovative delivery mechanisms like health tourism (essentially making the patient mobile), telemedicine (which makes the medical services electronically portable) and traditional migration of trained workforce.
Construction: It will probably be the largest segment of skilled workforce that India would need as it continues to build its future. The CII report guesses the incremental number at 55 million. Even today we have shortage of trained and skilled workers in construction — welders, carpenters, plumbers, electricians, artisans, brick layers, earthmoving and construction equipment operators, supervisors and managers.
Agriculture: It may look like a strange sector for creating skilled workforce, when there is so much disguised farm unemployment. While it is true that we need to transfer at least 200 million people in short order from farm to industries, we need to upgrade the quality and skills of our agricultural workforce. Unless we do that, we will not be able to improve farm productivity. Agriculture in India presents a classic case of quantitative surplus but qualitative shortage.
Agro-processing and post-harvest infrastructure: The rise in food prices, more than general inflation, has hit the poor severely. First, we must increase the supply of food and secondly, we must improve our post-harvest infrastructure and cold chain. At present, we allow al lot of our food to go waste. Our inefficiency in distribution and storage exacerbates our problems. There is a clear need to implement a holistic strategy of investing in skill enhancement of our youth in agriculture, agro-based industries, food processing, post harvest infrastructure and cold chain.
In addition, we need to provide the farmer better prices, while at the same time lowering the end price of farm produce to the ultimate consumer. This may seem like a paradox but it is not. The savings will come from eliminating middle men who do not add enough value and from enhanced efficiency, scale, planning, better yields in farm, eliminating waste and improving the plough-to-plate supply chain. Empirical evidence tells us that countries that have allowed large-scale retailing have achieved the objective of better prices to farmers and lower prices to consumers through the supply chain and investment in post-harvest infrastructure. If allowing foreign investments in multi-brand retail is going to help in lowering food prices then we should seriously consider it.
What is the test that our future generations will apply to determine whether India emerged as a great nation in 2022? It will not be whether we sent a manned spaceship to Mars or produced a better commercial aircraft than Boeing or produced hundreds of billionaires. It will not even be that India’s GDP grew so fast that we became the third richest nation on the planet. The test will be how fast and how inclusively India lifted 400 million of its own citizens from poverty without strife or internal conflict. And to achieve this feat, providing skills and training to young Indians will be a critical piece of the puzzle.
(The writer is managing director of Deloitte Consulting, India. These are his personal views)