Delayed dividend

India must not squander its demographic potential

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Can a country get rich before it gets old? That is one of the fundamental questions in the studies of development. Each country goes through a demographic transition, in which a certain level of per capita income — associated with better natal care and more accessible health services — increases the birth rate and stimulates population growth, both of which come down after a few decades as behavioural patterns change and fertility declines. This interim period of fast population growth is one in which countries have a favourable dependency ratio; the working-age population is large, when compared to those who must be supported. A surplus can be built, and, if invested properly at macro level, it increases overall wealth and brings the country close to upper-income status. This has been the development process followed by countries around the world in the past century, especially in East Asia.