The Union budget for FY25 was presented by the finance minister Nirmala Sithraman on July 23. Many have reacted to the budget and some of the focal points of discussions have 'middle-class' of the country and their welfare. Former RBI Governor, Raghuram Rajan also shared his thoughts on the matter, but he primarily focused on other aspects of the macro picture.
Raghuram Rajan Shares His Thoughts
The former governor and teaching faculty at the revered Chicago Booth School, while speaking to German network Deutsche Welle opined on the aspect of demographic paradigm in the country.
Rajan's fundamental emphasis was 'using' the said 'demographic dividend', and not squandering the advantage, which India has its disposal, albiet its young workforce. |
India has one of the youngest populations in the world, especially in the emerging economic spectrum. As of 2023, India has a median age of 28.3 years. Compared to the country's neighbour and rival China, which has a median age of 39-40.2 years.
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Rajan's fundamental emphasis was 'using' the said 'demographic dividend', and not squandering the advantage, that India has its disposal, albiet its young workforce. He said 'India needs to grow rich before India grows old'. This is an important point, given the changing dynamics of the systems and the population of the country.
Although the country is younger than many developing nations, it is still older than many of its emerging counterparts on the African continent, where the population is much younger.
Worldometer
In addition, when it comes to India's own population, it is currently the largest with over 1.4 billion inhabitants (India is the most populous country in the world, surpassing China). However, despite being better than its peers in East Asia, India's fertility rate, which is the number of children a women, has consistently dropped over the years.
Worldometer
In 2021, this rate dropped to below 2, which is lower than the ideal replacement rate 2.1.
Immpediments On India's Path
According to Rajan this is also crucial given other facets that affect the labour force in the country. India does not have a lot of immigration like its Western counterparts, therefore, replacement of the older population with new immigrant source is not immediately possible.
One of the major issues facing the Indian labour force is a dearth in participation in the younger age group, thereby wasting the said demographic dividend.
In addition, he also added the aspects of automation, AI and regional competition amongst countries in Asia Pacific, who are trying to open up as alternative for the saturated Chinese market.
In addition, the added layer or wave of protectionism will only makes things difficult for India, from attaining the goal of a manufacturing powerhouse. According the seasoned economist, India should look for a different path for growth.
