A study on impact of skilling and education level on productivity of India’s demographic dividend and effects of inter-state migration

Abstract

Introduction:- India has a population of 1.3 billion and has been growing steadily over the past 30 years. More than 66% of the Indian population lies in the age group of 10-50 with close to 40% concentrated in the 10-30 age group (Exhibit 1& 2). When broken down state wise (Exhibit 3), the percentage of population in the 15-59 age group across the Indian states hovers above 65%. Thus, India has a young population that fuels its demographic dividend which has the potential tofeed its workforce and future growth. Drivers of Population Growth in India:- Current Population Size of State: When thestate wise population growth is observed, there is no uniformity observed unlike the case of age wise distribution. The Indianstates have been plotted by their 2001-2011 decadal population growth and population size in millions(Exhibit 4). From the chart, it is clearly seen that, the states with larger population are witnessing a greater growth than states with smaller population. The state of Uttar Pradesh on the right-most end has the largest population and largest growth(highlighted in brown)while Kerala with one of the smaller population has a low growth(highlighted in green). This combination of growth and population size has divided India into the populous big states on right and smaller states on the right. However, there are exceptions to this. For example, Meghalaya has one of the highest decadal growths. This implies that size of population alone does not define the growth and hence impact the demographic dividend. Fertility of Women and Education Level: The fertility rate of women in India is linked to the education level. From Exhibit5and 6, the fertility rate declines as the education level of women increases (theonly exception to this trend is the state of Kerala). This result assumes importance as it implies that education level of woman directly impacts population growth. Regression between decadalpopulation growth information and the female literacy rate from census showsa small yet significant negative regression between the two.Next, looking at the education development index (Exhibit 6) as a proxy for the education level in the states, Uttar Pradesh, Bihar, Madhya Pradesh rank lower than states Kerala and Tamil Nadu. Meghalaya has a rank of 30 in the education development index and this implies that the fertility will be higher in the state leading to higher population growth that was observed earlier. Summary: Thus, the level of educationin a state ultimately impactsfertility rate of womenand this eventually impactsthe population growth and eventually the demographic dividend. Project Methodology: To study the demographic dividend in India and skilling in India, the project is structured to focus on first focus on labour supply and then on labour demand. Specific states in India areanalyzedforlabour supplythey produceand labour demand they generate. All states in India are not equal with regards to economic indicators, population andlabour supply. As the first step in the project, states that are performing well with regards to economic indicators and laggard states are identified. Next the education, health, cultural and infrastructure parameters for the selected states are analyzed to understandthe labour supply and quality of labour supply from these states. The points of concern for the laggard states are identified as these concerns need to be addressed to develop a good quality of labour supply that ensures that the demographic dividend is productive. Next, thenational and state-wsie labour demands are studied to identify where the sources of demand are.Finally, skilling requirements for the state are addressed.