How can India seize the demographic advantage

An ageing world needs workers; A young country has workers

Nandan Nilekani, chairman of the Unique Identification Authority of India, through the above quote, tried to bring out an opportunistic competitive advantage that India possesses as a result of its demographics. This competitive advantage, better known as the demographic dividend is the rise in the rate of economic growth due to a rising share of working age people in a population. And Mr. Nilekani is not the only person who has been vocal about this fact. In India, it is almost fashionable to include the demographic dividend in a discussion and feel good about the future. But, in my opinion, only the demographic advantage can’t be India’s ticket to the élite ‘Superpower Club’. Let us analyze this further.

Long-term growth depends ultimately on two factors – the number of workers in the economy and their level of productivity. The aggregate production function puts…