Demographic Dividend in India: Population Dynamics, Labour Force, Employment Challenges, Skill Development, and Policy Framework (UPSC Prelims + Mains)
India's demographic story is often described in one line: a very large young population is entering working age at a time when many major economies are ageing. This is a potential advantage, not a guaranteed one. A demographic dividend becomes real only when a country can educate, skill, employ, and productively use this working-age population for many years.
🇮🇳 India's Population Profile 2025
As per UNFPA's World Population Dashboard, India's total population in 2025 is about 1,463,900,000 (about 146.39 crore).
At the same time, the age structure shows a large working-age share: population aged 15–64 is about 68%, children (0–14) about 24%, and elderly (65+) about 7% (2025).
For UPSC, "Demographic Dividend" is a high-value theme because it links Indian Society (GS1), Governance and Social Justice (GS2), and Economy + Employment (GS3). It also appears in essay and interview discussions, and it connects to current issues like jobs, skilling, women's workforce participation, migration, and future ageing.
1) What Exactly is a Demographic Dividend?
📘 Definition (Exam-Ready)
Demographic Dividend: The economic growth potential that can arise when the share of working-age population becomes larger than the share of dependents (children + elderly), provided the working-age population is healthy, educated, skilled, and productively employed.
Dependency Ratio: The ratio of dependents (0–14 and 65+) to the working-age population (typically 15–64). A falling dependency ratio can create fiscal space and higher savings.
Working Age vs Labour Force: Working-age population is a demographic measure; labour force is the number of people who are working or seeking/available for work.
LFPR (Labour Force Participation Rate): Percentage of persons in labour force in total population (for a defined age group).
WPR (Worker Population Ratio): Percentage of employed persons in total population.
UR (Unemployment Rate): Percentage of unemployed persons in the labour force.
1.1 Potential dividend vs realised dividend
- Potential dividend exists when the age structure is favourable (large working-age share).
- Realised dividend happens when the economy creates enough productive jobs and builds human capital so that workers contribute to output and incomes rise.
1.2 How demographic dividend boosts growth (mechanisms)
- Labour supply effect: More workers can raise total production if jobs exist.
- Savings and investment effect: With fewer dependents, households may save more; higher national savings can finance investment.
- Human capital effect: Smaller family size can allow better spending per child on health and education, improving productivity.
- Women's empowerment effect: Fertility decline often correlates with higher female education and work participation, raising growth potential.
- Innovation and entrepreneurship effect: A large youth cohort can increase start-ups, adoption of new technologies, and productivity improvements.
1.3 First dividend and "second dividend" (advanced but useful for Mains)
- First demographic dividend: Growth boost from a rising share of working-age population.
- Second demographic dividend: When people live longer and prepare for old age, they may save and invest more (pensions, financial assets), leading to capital deepening and sustained growth. This requires good financial systems and social security reforms.
2) Population Dynamics in India: The Demographic Transition
India's demographic dividend is rooted in its demographic transition—the shift from high birth and death rates to low birth and death rates. This transition changes the age structure: first the child population share falls, the working-age share rises, and later the elderly share rises (ageing).
📊 Demographic Transition – Five Stages
2.1 Stages of demographic transition (conceptual table)
| Stage | Birth Rate | Death Rate | Population Growth | Age-Structure Outcome |
|---|---|---|---|---|
| Stage 1 | High | High | Low | Very young population but low life expectancy |
| Stage 2 | High | Falling | High | Youth bulge begins; population rises fast |
| Stage 3 | Falling | Low | Moderate | Dependency falls; dividend window opens |
| Stage 4 | Low | Low | Low/Stable | Ageing starts; dividend narrows |
| Stage 5 (in some countries) | Very low | Low | Negative | Population decline + high ageing burden |
2.2 India's age structure: what it means for dividend
India's current age composition indicates a large working-age base. In 2025, the working-age group (15–64) is about 68%, children (0–14) about 24%, and elderly (65+) about 7%.
This structure can support growth if India converts it into high employment, higher productivity, and better earnings.
2.3 Population momentum and future peak
Even with fertility falling, population can keep growing for decades due to population momentum (a large base of people in childbearing ages). UN projections reported in public summaries of World Population Prospects 2024 indicate India's population is expected to peak in the early 2060s at about 1.7 billion and then start declining.
UPSC relevance: This implies India has a limited multi-decade window to create jobs and raise productivity before ageing pressures rise.
2.4 "One India, many demographies": state-level variation
India does not have one uniform demographic story. Some states have lower fertility and faster ageing; others still have higher fertility and a larger youth share. This creates a policy challenge:
- States with younger populations need schools, skilling, jobs, urban planning.
- States moving towards ageing need healthcare, social security, elder-care systems and higher productivity to sustain growth.
2.5 Urbanisation and migration: redistributing the dividend
Demographic dividend is also shaped by internal migration (rural-to-urban, and poorer states to faster-growing states). Migration can help match workers to jobs, but it requires:
- Portable social security (ration, health insurance, pensions)
- Affordable rental housing and basic services in cities
- Urban infrastructure (transport, water, sanitation) and safe workplaces
3) Labour Force in India: Size, Participation, and Key Indicators (PLFS)
For UPSC, you must clearly separate three ideas:
- Working-age population: demographic base (e.g., 15–64)
- Labour force: those working or seeking/available for work
- Employment quality: productivity, wages, formal/informal, job security
📘 Key Labour Force Indicators
LFPR (Labour Force Participation Rate): Percentage of persons in labour force in total population for a defined age group. Shows the "available labour pool".
WPR (Worker Population Ratio): Percentage of employed persons in total population. Shows how many people are actually employed.
UR (Unemployment Rate): Percentage of unemployed persons in the labour force. Headline unemployment indicator.
📊 PLFS 2024 – Key Labour Force Indicators (Age 15+, Usual Status)
3.1 PLFS indicators (latest official snapshot)
MOSPI's PLFS "Key Employment Unemployment Indicators, 2024" provides LFPR, WPR and UR for age 15+ for Jan–Dec 2024 (usual status and current weekly status).
| Indicator (Age 15+) | Rural+Urban (Usual Status) Jan–Dec 2024 | What it tells you (UPSC angle) |
|---|---|---|
| LFPR | Total: 59.6% (Male: 79.2%, Female: 40.3%) | Participation gap, especially gender gap; shows the "available labour pool" |
| WPR | Total: 57.7% (Male: 76.6%, Female: 39.0%) | How many people are actually employed |
| UR | Total: 3.2% (Male: 3.3%, Female: 3.1%) | Headline unemployment (but does not fully capture underemployment/quality) |
3.2 Why "low unemployment" can still coexist with "job crisis"
In India, headline unemployment may appear moderate, yet a job crisis can persist due to:
- Underemployment: people work fewer hours than they want, or in low productivity activities
- Informality: many jobs lack contracts, stability, or social security
- Low wages: employment exists but incomes remain low
- Educated unemployment: unemployment concentrated among better-educated youth
- Quality mismatch: skills taught do not match the skills demanded
3.3 Gender dimension: the "missing women" in labour force
Female labour force participation is one of the biggest multipliers for demographic dividend. When women can enter and stay in the workforce, the economy gains:
- Higher household incomes and poverty reduction
- Greater savings and better child outcomes
- Better utilisation of education investments
However, barriers remain: unpaid care work, safety and mobility constraints, social norms, lack of childcare, and limited suitable jobs close to home.
4) Youth Employment Reality: What the Data Shows
India's demographic dividend is largely a "youth dividend." But youth employment outcomes are not automatically strong. The India Employment Report 2024 (IHD in partnership with ILO) provides important insights using official data (NSS/PLFS) and analysis over time.
📘 Youth Employment Concepts
Youth: Typically defined as persons aged 15-29 years for employment statistics.
NEET: Youth Not in Employment, Education, or Training - a key risk indicator for demographic dividend.
Educated Unemployment: Unemployment among those with secondary education or higher, often higher than overall unemployment.
⚠️ Youth Employment Challenge – The "Qualification Paradox"
4.1 Youth unemployment trend (long-term picture)
The report notes that youth unemployment (usual status) rose sharply from 5.7% (2000) to 17.5% (2019), and then declined to 12.1% (2022) and further to about 10% (2023).
UPSC interpretation: The decline after 2019 should be read carefully, because shifts into certain types of employment (including distress-driven employment) can reduce measured unemployment without improving job quality. The report's executive summary highlights that recent improvements need careful interpretation, including due to increases in agricultural employment in rural areas.
4.2 Educated youth unemployment: the "qualification paradox"
A critical finding is that unemployment among educated youth is much higher. For example, unemployment among youth with a graduate degree or higher was about 29.1% in 2022 and 28.4% in 2023, with female graduates facing even higher unemployment (e.g., 34.8% in 2023 for female youth with graduate/higher).
UPSC angle: This supports a common Mains argument—India's challenge is not only job creation, but job creation that matches aspirations and education, and improving employability and labour market matching.
4.3 Low penetration of technical education (skills pipeline weakness)
The same report shows that the share of youths (15–29) with technical education remains low. In 2022, it was about 5.71% for male youth and 3.30% for female youth; rural youth about 3.01% vs urban youth about 8.43%.
This matters because a demographic dividend needs a strong pipeline of industry-relevant skills, including technical and vocational capabilities.
5) Employment Challenges That Can Turn Dividend into a Burden
A demographic dividend becomes a demographic burden when a large working-age population faces unemployment, low-quality jobs, and weak human capital. India's major employment challenges can be organised into exam-ready buckets.
⚖️ Demographic Dividend vs Demographic Burden
- Educated, skilled workforce
- Productive employment opportunities
- Higher savings and investment
- Women in workforce
- Innovation and entrepreneurship
- Rising incomes and living standards
- Unemployed, unskilled masses
- Informality and low-quality jobs
- Low savings, dependency on state
- Women excluded from workforce
- Social unrest and frustration
- Wasted human potential
📘 Demographic Burden
Demographic Burden: When a large working-age population cannot find productive employment, leading to unemployment, underemployment, social unrest, and wasted human potential. The opposite outcome of a demographic dividend.
5.1 Job creation vs jobless growth
- GDP can grow without enough jobs if growth comes mainly from capital-intensive sectors or productivity gains without labour absorption.
- For dividend, India needs labour-absorbing growth in manufacturing, construction, logistics, tourism, care economy, and MSMEs—along with productivity improvements.
5.2 Informality and low job quality
Employment quality is as important as employment quantity. The India Employment Report discusses continuing concerns about informal work and weak social security provisions for many workers.
The report also provides a distribution of employment structure over time. In 2022, regular formal employment was about 9.5% of employment (around 51.5 million), while other categories include regular-informal jobs within organized/unorganized segments.
UPSC interpretation: A large share of workers remain in categories with weaker protection, lower stability, and often lower productivity. A dividend requires a transition towards higher productivity and better quality jobs.
5.3 The rural challenge: disguised unemployment and low productivity
- Agriculture still absorbs a large workforce, but productivity per worker is often low.
- Many workers are "employed" but underutilised (disguised unemployment), especially in smallholder farming and informal rural work.
- Demographic dividend needs structural transformation: workers moving from low productivity to higher productivity sectors.
5.4 The urban challenge: decent work, housing, and cost of living
- Urban job growth must keep pace with migration and natural increase.
- Without affordable housing and transport, workers end up in slums or long commutes, lowering productivity and quality of life.
- Urban informal work expands when the formal sector cannot absorb new entrants.
5.5 NEET and labour force exit among women
Youth not in employment, education or training (NEET) is a key risk. The India Employment Report includes survey evidence from low-income localities showing about one-fourth of surveyed youths were NEET, and women dominated among them (about 44.5% among young women vs 7.5% among young men in that surveyed group).
Even though this is survey-specific, it reinforces a wider policy message: without childcare, safety, mobility and social support, a large part of potential labour supply remains unused.
5.6 Skills mismatch: "degrees without employability"
- Many students pursue general degrees that do not build job-ready skills.
- Employers often demand practical skills, communication, digital literacy, and apprenticeship-style experience.
- Result: educated unemployment + shortages of skilled technicians and frontline workers.
6) Skill Development and Human Capital: Turning Youth into a Productive Workforce
Human capital is the bridge between demographic potential and economic output. For UPSC, you should connect education + health + nutrition + skills with productivity and employment outcomes.
🎯 India's Skilling Ecosystem – Five Layers
📘 Human Capital
Human Capital: The stock of knowledge, skills, health, and capabilities embodied in people that contributes to economic productivity. Key components include education, vocational training, health, and nutrition.
Skills Mismatch: Gap between skills possessed by job seekers and skills demanded by employers, leading to unemployment despite job vacancies.
6.1 Why skill development is central to demographic dividend
- More people in working age is useful only if they are employable and productive.
- Skills reduce frictional unemployment and improve matching.
- Skilling supports industrial growth, MSMEs, start-ups, and services.
6.2 NEP 2020 and vocational education
India's education policy direction includes mainstreaming vocational exposure. A background note published on the education.gov.in domain states: by 2025, at least 50% of learners through school and higher education should have exposure to vocational education.
UPSC angle: This can be used in Mains answers to show a policy shift from "degree-first" to "skills + dignity of labour."
6.3 Skilling ecosystem: what UPSC expects you to mention
You can present India's skilling ecosystem as a layered model:
- School and foundational skills: literacy, numeracy, digital basics, communication.
- Vocational and technical training: ITIs, polytechnics, short-term courses, NSQF alignment.
- Industry-linked training: apprenticeships, on-the-job training, sector skill councils.
- Higher education and advanced skills: engineering, research, AI/data, design, healthcare, green tech.
- Lifelong learning: reskilling and upskilling for changing technology and job roles.
📘 Key Skilling Initiatives
Skill India Mission: Umbrella programme launched in 2015 to provide skill training to youth across India.
PMKVY (Pradhan Mantri Kaushal Vikas Yojana): Flagship skill certification scheme providing short-term training and recognition of prior learning.
NSDC (National Skill Development Corporation): Public-private partnership to promote skill development by catalysing private sector initiatives.
ITIs (Industrial Training Institutes): Government institutions providing vocational training in various trades.
NSQF (National Skills Qualifications Framework): Competency-based framework organizing qualifications according to a series of levels of knowledge, skills and aptitude.
6.4 Apprenticeships: the "missing middle" in India's education-to-job pipeline
Countries with strong manufacturing and services absorption usually have deep apprenticeship systems where young people earn while they learn. For India, expanding apprenticeships helps:
- Reduce skills mismatch by aligning training with real workplace needs
- Improve employability of graduates and diploma holders
- Create a smoother school-to-work transition
6.5 Digital skills and the platform economy (new labour market reality)
Digital platforms are creating new types of work, but they also blur the line between employee and self-employed. The India Employment Report notes that many gig and platform opportunities can be seen as an extension of informal work, often lacking formal social protection.
UPSC approach: present balanced view—digital jobs create opportunities, but policy must ensure decent work standards, portability of benefits, and social security.
7) Policy Framework in India: Key Policies and Institutional Approach
UPSC Mains answers score higher when you show that you understand the policy architecture, not only the problem. Below is an exam-ready map of key policy directions.
🗺️ Policy Map for Realising Demographic Dividend
7.1 Population policy and health system focus
India's population stabilisation approach is based on voluntary and informed choices, and improving access to reproductive and child health services. The National Population Policy (NPP), 2000 is an important reference document.
UPSC linkage: fertility decline, maternal health, child health, and women's empowerment directly influence age structure and human capital.
7.2 Employment policy direction: job creation + job quality + inclusion
The India Employment Report 2024 identifies key policy areas like promoting job creation, improving employment quality, addressing inequalities, strengthening skills and active labour market policies, and bridging knowledge deficits.
📘 Key Employment Policies and Schemes
MGNREGA: Mahatma Gandhi National Rural Employment Guarantee Act - provides 100 days of guaranteed wage employment to rural households.
PM-SVANidhi: Street vendor support scheme providing working capital loans.
e-Shram Portal: National database for unorganised workers to facilitate social security delivery.
Labour Codes (2020): Four consolidated labour codes covering wages, industrial relations, social security, and occupational safety.
7.3 Labour reforms and social security (conceptual)
- Labour market flexibility with protections: balancing ease of doing business with worker rights
- Social security expansion: coverage for informal workers, gig workers, migrants
- Formalisation incentives: reducing compliance burden for MSMEs while encouraging registration and benefits
7.4 Education and skilling reforms (policy focus)
- NEP 2020's push for vocational exposure and multidisciplinary education
- Industry-linking through apprenticeships and credit frameworks
- Digital skilling at scale
7.5 Industrial and sectoral strategy (jobs lens)
To absorb a large workforce, the economy needs labour-intensive and value-adding sectors. A strong answer typically mentions:
- Manufacturing ecosystems: textiles, food processing, electronics, toys, leather, EV supply chains
- Construction and housing: formalising construction labour, safety and skilling
- Modern services: IT/ITES, logistics, finance, healthcare, education, tourism
- MSMEs and start-ups: credit, market access, technology adoption
- Green jobs: renewable energy, energy efficiency, waste management, climate-resilient agriculture
7.6 A compact "policy map" table for quick revision
| Policy Area | Core Goal (Dividend Link) | Examples of Instruments (Write any 2–3 in Mains) |
|---|---|---|
| Health + Nutrition | Healthy, productive workforce | Primary healthcare strengthening, maternal-child health, nutrition programmes, preventive care |
| Education Reform | Foundational learning + employability | NEP 2020, vocational exposure target, learning outcomes focus |
| Skill Development | Reduce mismatch; raise productivity | Industry-linked skilling, apprenticeships, certification frameworks |
| Job Creation | Absorb youth cohort | Manufacturing push, MSME support, infrastructure build-out, services expansion |
| Job Quality + Formalisation | Decent work and stability | Labour reforms, social security portability, reducing informality |
| Women's Workforce Participation | Unlock a major growth multiplier | Childcare support, safety/transport, flexible work, skills + local jobs |
| Urban Planning | Handle migration and job clusters | Affordable housing, mass transit, rental markets, urban services |
8) Women's Labour Force Participation: Unlocking the Full Dividend
Female labour force participation (FLFP) is critical for maximising India's demographic dividend. With FLFP at about 40.3% (PLFS 2024), there is significant untapped potential.
👩 Women's Workforce Participation – The Untapped Dividend
📘 Women's Workforce Participation
Female LFPR: Percentage of women aged 15+ who are working or seeking work. India's FLFP has historically been lower than male LFPR.
U-shaped hypothesis: Theory that FLFP first declines with economic development (as families can afford single earner) and then rises at higher development levels (with better education and service jobs).
Care economy: Unpaid household work, childcare, and eldercare predominantly done by women, which constrains their labour market participation.
8.1 Why women's participation matters for dividend
- Economic growth: Higher female participation directly adds to labour supply and GDP
- Poverty reduction: Dual-income households are more resilient
- Human capital: Working mothers often invest more in children's education and health
- Demographic transition: Women's education and employment correlate with lower fertility and better child outcomes
8.2 Barriers to women's workforce participation
- Unpaid care work: Women spend significantly more time on household chores and caregiving
- Safety concerns: Lack of safe transport and workplaces discourages participation
- Social norms: Expectations about women's primary role as homemakers
- Lack of suitable jobs: Limited formal sector jobs near residential areas
- Education-employment mismatch: Rising education not translating into employment
8.3 Policy interventions to raise FLFP
- Affordable and accessible childcare (crèches at workplaces)
- Safe public transport and last-mile connectivity
- Flexible work arrangements and work-from-home options
- Skilling programmes targeted at women
- Self-help groups (SHGs) and women entrepreneurship support
9) Migration and Urbanisation: Spatial Dimensions of Demographic Dividend
India's demographic dividend has a strong spatial dimension. Internal migration redistributes working-age population from surplus labour regions to regions with job opportunities.
🚶 Migration & Urbanisation – Redistributing the Dividend
📘 Migration Concepts
Internal Migration: Movement of people within the country, typically from rural to urban areas or from less developed to more developed states.
Circular Migration: Temporary or seasonal migration where workers move for work but maintain ties to origin areas.
Remittances: Money sent by migrants to their families in origin areas, supporting rural economies.
9.1 Migration patterns in India
- Rural-to-urban migration: Driven by better job opportunities in cities
- Interstate migration: From states like Bihar, UP, Odisha to Maharashtra, Gujarat, Delhi, Karnataka
- Seasonal/circular migration: Common in construction, agriculture, brick kilns
9.2 Challenges faced by migrant workers
- Lack of portable social security (ration cards, health insurance)
- Poor housing conditions in destination cities
- Vulnerability to exploitation and informal work
- Children's education disruption
- Social discrimination and exclusion
9.3 Policy responses for migrant welfare
- One Nation One Ration Card: Portability of PDS benefits
- e-Shram portal: Registration of unorganised workers including migrants
- Ayushman Bharat: Portable health insurance
- Interstate Migrant Workmen Act: Legal protections for migrant workers
10) How India Can Maximise the Dividend: A Mains-Ready Strategy Framework
In UPSC Mains, the best answers follow a structured logic: Opportunity → Constraints → Measures → Way Forward. Below is a practical framework you can reuse.
🎯 Strategy Framework – Converting Dividend to Reality
- 68% working age (2025)
- ~1.46 billion market
- Multi-decade window
- ~29% graduate unemployment
- Low tech education
- Informality, gender gap
- Human capital mission
- Skill revolution
- Job-rich growth
- Women in workforce
- Youth bulge → Skills bulge
- Decent work reforms
- Time-bound action
10.1 Opportunity (write 2–3 points)
- Large working-age share (15–64 about 68% in 2025)
- Population size and market scale (2025 population about 1.4639 billion)
- Multi-decade window before ageing rises significantly
10.2 Constraints (write 4–6 points)
- Educated youth unemployment high (e.g., graduate youth unemployment ~29% in 2022)
- Low technical education penetration among youth
- Informality and low-quality jobs; slow transition to regular formal employment
- Gender barriers in labour force participation
- Mismatch between education outputs and labour market demand
- Urban infrastructure and housing constraints for migrant workers
10.3 Measures (write under headings)
A) Human capital mission: health + learning outcomes
- Strengthen primary healthcare, preventive health, maternal and child health
- Fix foundational learning and reduce dropout rates
- Expand nutrition support for early childhood and adolescents
B) Skill and apprenticeship revolution
- Make vocational education aspirational (industry-linked, credit-based pathways)
- Scale apprenticeships and on-the-job learning (especially for MSMEs)
- Use digital platforms for modular skill certification and career services
C) Job creation strategy: labour-intensive + productivity
- Create job-rich manufacturing clusters (plug-and-play, logistics, export linkages)
- Support MSMEs with credit, technology, compliance simplification
- Expand services jobs (healthcare, education, tourism, logistics, care economy)
- Invest in infrastructure (construction jobs + long-term competitiveness)
D) Women in workforce: remove barriers
- Affordable childcare and crèches near workplaces
- Safe mobility (lighting, transport connectivity, last-mile safety)
- Flexible work options and local job creation for women
E) Formalisation + social security
- Make formalisation beneficial: easier compliance, benefits access, credit and market linkages
- Portable social security for migrants and informal workers
- Minimum standards for gig/platform workers (health cover, insurance, grievance systems)
10.4 Way forward: one-line conclusion (high scoring)
India's demographic dividend will be realised only if "youth bulge" becomes a "skills-and-jobs bulge"—through a coordinated push on human capital, job-rich growth, women's workforce participation, and decent work reforms.
11) UPSC Previous Year Questions: Direct Linkage
📝 UPSC Mains PYQ (2016, GS2)
Q: "Demographic Dividend in India will remain only theoretical unless our manpower becomes more educated, aware, skilled and creative." What measures have been taken by the government to enhance the capacity of our population to be more productive and employable?
How to answer (outline):
- Define demographic dividend + link with employability
- Measures: education reform, skilling, health, employment generation, women's participation, digital initiatives
- Critical add-on: implementation gaps + need for job-rich growth and quality jobs
📝 UPSC Mains PYQ (2014, GS3)
Q: "While we flaunt India's demographic dividend, we ignore the dropping rates of employability." What are we missing while doing so? Where will the jobs that India desperately needs come from? Explain.
How to answer (outline):
- Explain employability gap (skills mismatch, poor learning outcomes, low apprenticeships)
- Jobs sources: manufacturing clusters, construction/infrastructure, MSMEs, modern services, care economy, green jobs
- Reforms: skilling + labour market + formalisation + women's participation + urban planning
📝 UPSC Mains PYQ (2013, GS1)
Q: Discuss the positive and negative effects of globalization on women in India.
Link to demographic dividend: Globalization has created new employment opportunities for women (IT, BPO, export manufacturing) but also challenges (informal work, job insecurity). Women's participation is crucial for realizing demographic dividend.
📝 UPSC Mains PYQ (2019, Essay)
Q: "Mindful manifesto is the catalyst to a tranquil self."
Indirect link: Essays on youth, employment, and India's future often touch on demographic dividend themes. Be prepared to integrate demographic dividend concepts into broader socio-economic essays.
📝 UPSC Prelims PYQ (2021)
Q: Consider the following statements about Periodic Labour Force Survey (PLFS):
- PLFS is conducted by NSO.
- PLFS provides annual estimates of employment indicators.
Which of the statements given above is/are correct?
Answer: Both statements are correct. PLFS is conducted by NSO (National Statistical Office) and provides quarterly bulletins and annual reports on employment indicators.
12) Prelims-Focused Quick Revision Points
- Demographic dividend = growth potential due to favourable age structure (high working-age share).
- India 2025 population about 1,463,900,000 (146.39 crore).
- India 2025 age structure: 15–64 about 68%, 0–14 about 24%, 65+ about 7%.
- PLFS key indicators (age 15+, Jan–Dec 2024): LFPR (total) ~59.6% (usual status), UR (total) ~3.2% (usual status).
- Youth unemployment rose sharply 2000→2019 and then declined by 2023 (interpret carefully).
- Educated youth unemployment can be much higher than overall unemployment (graduate youth ~29% in 2022).
- Technical education among youth is low; rural-urban and gender gaps exist.
- NEP direction: 50% learners to get vocational exposure by 2025 (policy intent).
- Demographic dividend is time-bound; ageing will eventually rise, so the window must be used for jobs and productivity.
- India's population expected to peak in early 2060s at about 1.7 billion.
- Female LFPR (2024): about 40.3% vs Male LFPR: about 79.2%.
- Regular formal employment was about 9.5% of total employment (2022).
13) Mains Practice Questions (for Self-Answer Writing)
- Explain how India's demographic dividend can turn into a demographic burden. Suggest measures at the levels of education, skilling, and labour market reforms.
- "Low unemployment does not necessarily mean a healthy labour market in India." Discuss with reference to underemployment and informality.
- Evaluate the role of women's workforce participation in converting demographic potential into economic growth.
- Discuss the role of vocational education and apprenticeships in improving employability of India's youth.
- How does internal migration influence the spatial distribution of demographic dividend? What governance reforms are required to support migrant workers?
- Critically examine the statement: "India's educated unemployment problem reflects a failure of both the education system and the labour market."
- What policy measures can help India transition from informal to formal employment while protecting workers' interests?
14) Practice MCQs (UPSC Prelims Style) with Answers and Explanations
Practice MCQs
Q1. The term "demographic dividend" primarily refers to:
- (a) Increase in birth rate leading to higher consumption
- (b) Economic growth potential arising from a higher share of working-age population
- (c) Increase in elderly population leading to higher savings
- (d) Population decline due to low fertility
Answer: (b)
Explanation: Dividend is potential growth arising from a favourable age structure, especially when working-age share rises relative to dependents.
Q2. Which one of the following indicators best captures "labour force participation"?
- (a) Share of employed persons in population
- (b) Share of unemployed persons in total population
- (c) Share of persons working or seeking/available for work in population
- (d) Share of informal workers in total employment
Answer: (c)
Explanation: LFPR counts people working or seeking/available for work as a proportion of population (for a defined age group).
Q3. According to PLFS key indicators for Jan–Dec 2024 (usual status, age 15+), the unemployment rate (rural+urban, persons) is closest to:
- (a) 1%
- (b) 8%
- (c) 12%
- (d) 3%
Answer: (d)
Explanation: PLFS 2024 (usual status) reports UR (persons, rural+urban) around 3.2%.
Q4. A major reason why demographic dividend may not be realised even with a large working-age population is:
- (a) Lack of adequate productive job creation and weak human capital
- (b) Excessive foreign exchange reserves
- (c) High rainfall variability
- (d) Decline in urbanisation
Answer: (a)
Explanation: Dividend is conditional on education, skills, health, and job creation.
Q5. The India Employment Report 2024 highlights that educated youth unemployment is:
- (a) Always lower than overall unemployment
- (b) Often higher, with very high rates among graduate youth
- (c) Zero because graduates can always find jobs
- (d) Not measurable through official surveys
Answer: (b)
Explanation: The report notes very high unemployment among graduate youth (e.g., ~29% in 2022).
Q6. Which of the following is most likely to raise female labour force participation sustainably?
- (a) Only increasing college seats
- (b) Only increasing rural road length
- (c) Childcare support + safe mobility + suitable job opportunities
- (d) Only increasing government job vacancies
Answer: (c)
Explanation: Structural barriers (care, safety, transport, suitable work) must be addressed together.
Q7. NEP's thrust on vocational education is best linked to demographic dividend because it aims to:
- (a) Improve employability and reduce skills mismatch
- (b) Increase inflation
- (c) Reduce the working-age population share
- (d) Replace all higher education with vocational courses
Answer: (a)
Explanation: Vocational exposure at scale is intended to build job-ready skills.
Q8. Which statement best captures "population momentum"?
- (a) Population grows only if fertility is above replacement
- (b) Population cannot grow if fertility falls
- (c) Population grows only due to immigration
- (d) Population can keep growing even after fertility declines because a large cohort is entering childbearing ages
Answer: (d)
Explanation: Momentum comes from age structure; growth continues due to the size of reproductive-age cohorts.
Q9. In the context of employment quality, a key concern with gig/platform work highlighted in labour discussions is:
- (a) It always guarantees formal social security
- (b) It often resembles informal work with weak social protection
- (c) It eliminates the need for skills
- (d) It is restricted only to rural areas
Answer: (b)
Explanation: Reports often describe platform work as an extension of informal work lacking formal protections.
Q10. Which set of policies most directly helps convert demographic dividend into sustained growth?
- (a) Only population control targets
- (b) Only high-end research funding
- (c) Health + education + skilling + job-rich growth + women's participation
- (d) Only import substitution
Answer: (c)
Explanation: Dividend needs a combined human capital and employment strategy.
15) Final Takeaway (One Paragraph for Essay/Interview)
India's demographic dividend is a time-bound opportunity. The age structure is favourable, but outcomes depend on whether India can create enough productive jobs, raise human capital, improve skills and employability, and bring more women into the workforce while improving job quality and formalisation. If India succeeds, the dividend can lift growth and living standards for decades; if it fails, the same youth bulge can translate into unemployment, inequality, and social stress. The window is open now—policy action on education, skilling, job creation, and labour market reforms will determine whether India reaps a dividend or bears a burden.