India’s economy can grow from the current $3 trillion to $9 trillion and $40 trillion by 2030 and 2047, respectively, if its working-age population, which is expected to increase by over 100 million people in the next eight years, is productively employed, the Confederation of Indian Industry (CII) has said.
The powerful industries group also cautioned in its report that if India does not create enough jobs and its workers are not adequately prepared for those jobs, its demographic dividend may turn into a liability. Additional job creation can be done on a sustained basis only with changes in its policy frameworks for education and workforce management.
“The golden period of 30 years between 2020-50 where our working-age population will bulge can be an important horizontal enabler to bolster growth, even as the developed world including China ages,” the report notes.
Ritu Arora, CEO and chief investment officer (CIO) Asia at Allianz Investment Managers, said India may well surpass the government’s target of $5 trillion GDP by 2025 with a marginal delay. For perspective, it took India seven years to add $1 trillion to become a $2 trillion economy in 2014, World Bank data showed.
As part of the ongoing multi-decadal growth super-cycle, India is expected to add a trillion dollar to nominal GDP every few years despite the damaging effects of the Covid-19 pandemic, demonetisation and the IL&FS crisis that had shaved off Rs8.48 trillion in investor wealth crisis over the past four years. This is a trend no investor wants to lose out on,” Arora has said.
The CII report said that since the job market is biased towards high-skill labour, the creation of jobs for low-skill labour, who would continue to dominate its workforce, will challenge India.
In 2020, there were about 900 million people (67 per cent of the total population) in the working-age group of 15-64 in India, which is expected to expand by another 100 million by 2030, despite a declining trend in fertility rate. This implies that a whopping 24.3 per cent of the incremental global workforce over the next decade will come from India, the report states.
Over the years, India has experienced rising literacy rates, but the level of vocational training/skilling is low, which gets reflected in the high unemployment rate among the educated, the CII report said.
“Closing the skill gaps of its qualified workforce will be critical, as India depends more on human capital than its peer countries that have a similar level of economic development,” it said, adding that skilling and reskilling require a coordinated response from the government, industry, academia even as COVID continues to cause structural changes to the workplace.
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