India’s demographic dividend is a wasting asset. With a population of about 1.45 billion and a large working-age cohort (15–64) that remains favourable only until the mid-2050s, the country has limited time to convert numbers into productivity. That conversion will not come from GDP growth alone. It depends on measurable outcomes in health and nutrition, school quality and employable skills, and the availability of stable jobs that raise household incomes.
The economic question is no longer just “how fast” India grows, but “who participates” in that growth. A services-led economy can raise GDP without absorbing enough labour at the scale India needs. A manufacturing push, alongside higher-productivity agriculture and better-quality services jobs, is the only plausible route to inclusive growth.
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Public health and nutrition are economic policy
India’s health profile is changing. As life expectancy rises, the share of elderly non-working citizens will increase. That will raise demand for healthcare and long-term care, and it will change how families save and spend. The demographic dividend is therefore inseparable from basic health outcomes.
Nutrition remains the most stubborn constraint. The National Institute of Nutrition (NIN) classifies dietary adequacy using calorie, protein and fat intake across per capita expenditure classes. Since 2009–10, average calorie intake has fallen even as consumption of some items such as milk, eggs and fish has risen. India’s foodgrain distribution architecture reaches a large share of the population, but “zero hunger” is not only about calories. A nutritious diet for the undernourished remains the harder test.
On global comparisons, the Global Hunger Index has ranked India at 102, with a score of 38.1, and has flagged undernourishment affecting an estimated 195 million people. India disputes the methodology, but the same framework is applied across countries. The practical implication does not change: child wasting, stunting and mortality track poor nutrition, and anemia among young women, pregnant women and children continues to be a policy alarm bell.
Anganwadi services have helped, but targeting and follow-through need tightening—especially on anemia and child nutrition outcomes, not just inputs and coverage.
Preventive care, food quality, and the cost of treatment
Public health gains come more cheaply through prevention than through hospital care. Immunisation, sanitation, and clean surroundings reduce disease burden and raise productivity. The unfinished work is enforcement and quality—particularly food safety. Adulteration in staples and high-consumption items (paneer and edible oils are often cited in public debate) cannot be treated as routine non-compliance. A “zero tolerance” posture is not rhetoric; it is enforcement capacity.
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Curative care poses a different risk. Inpatient treatment is becoming steadily more expensive. The shift from government-led hospital dependence to insurance-driven care has expanded access for many, but it also brings predictable pitfalls: uneven pricing, opaque billing, and one episode of care wiping out a family’s finances.
A practical reform is to move towards scientifically determined treatment ceilings and standardised packages across hospitals—so that reimbursement and out-of-pocket costs have rational limits, rather than being set by the bargaining power of the patient at the moment of distress. The question is not whether insurance is useful, but whether the system is designed to protect households from catastrophic health expenditure.
Education, employable skills, and labour market outcomes
Education policy should be judged less by the number of schemes and more by employability. India needs quality schools and training that translate into productive work. The labour market indicators cited in recent discussions point to a labour force participation rate (LFPR) around 47–48%, a worker population ratio (WPR) around 53%, and persistent concerns about job quality.
Monitoring therefore has to shift from scheme-by-scheme accounting to whether household incomes rise in a stable way. A services-heavy model that expands low-entry gig work—delivery and similar roles—may raise participation temporarily without building durable earnings.
Labour codes, if implemented effectively, could be transformative. But their promise is wasted if manufacturing does not expand. Skills policy also has to match the job mix India wants: more factory-floor employment, more technicians, more supervisors, more quality-control roles—not only a swelling pool of low-paid services work.
Manufacturing, FTAs, and the MSME cost handicap
A push towards manufacturing is necessary, but it will collide with India’s cost structure. Free trade agreements—particularly with the European Union and the United States—can expand market access, but they will also expose MSMEs to sharper import competition, including in product categories where duties may fall to zero.
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If MSMEs are asked to compete globally, the domestic cost handicap has to be tackled with equal seriousness. Power costs, financing costs, and logistics costs remain recurring constraints. Without systematic reduction in these input costs, “competitiveness” becomes a slogan that small firms pay for through squeezed margins and stalled investment. Skilling must therefore be paired with cost reforms, not treated as a substitute for them.
The dividend can become a liability
In a growing economy, the share of the workforce in agriculture should fall as workers move to higher-productivity sectors. Yet India is showing an agriculture workforce share around 46.1%, with an increase of roughly 68 million over the past decade. That is not a sign of agrarian strength; it is a sign that other sectors are not absorbing labour fast enough.
Part of this rise is often linked to increased women’s participation in farm work, including work on family farms counted as employment. That may lift measured participation, but it can also mask disguised unemployment—more hands on the same low-productivity land, with no commensurate rise in incomes. Combined with underemployment in parts of the services economy, it raises a single policy question: where are the stable, productivity-linked jobs?
India’s demographic dividend will not automatically convert into prosperity. If the economy cannot generate enough productive jobs, the same youth bulge becomes a liability—lower earnings, weak demand, and social stress. India needs a workforce that is educated, healthy, and employable in higher-productivity sectors, including manufacturing, not a labour market that defaults to subsistence work and short-duration services roles.
The peak of the demographic opportunity is often placed around 2041. That leaves limited time for course correction. The test is simple: move workers out of low-productivity agriculture, raise job quality in services, and build labour-absorbing manufacturing—while ensuring health and nutrition outcomes that keep the workforce productive. Without that package, India will reach the end of its demographic window with too little to show for it.