Skills and the demographic dividend

India is a young country. Its median age is under 30, and the share of the population in the working ages — roughly 15 to 64 — is still rising, while the share of children falls and the share of older people is still comparatively small. Economists call this a demographic dividend: when the working-age share rises, output per person can grow faster, because more people earn relative to those who depend on them. But a dividend is an opportunity, not a guarantee. It pays off only if working-age people are educated, healthy and able to find productive work; otherwise a large young population becomes a strain on jobs, services and politics.

The education and training system is the first link. India has expanded schooling sharply, but learning outcomes remain weak, as later notes in this series show, and employers frequently report that graduates lack job-ready skills. The Skill India Mission, launched in 2015, and the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which funds short-term training, were designed to close this gap, alongside Industrial Training Institutes (ITIs) and apprenticeship programmes. The record is mixed: enrolments have been large, but placement and wage gains have often been modest, and training has not always matched local employer demand.

The second link is jobs. Each year millions of young people enter the labour force, and the economy must create work at a pace and quality that matches their aspirations. Manufacturing, which absorbed young workers in East Asia's demographic dividend, has grown more slowly in India, and much new work is in informal services. The result is a paradox visible in the data: rising participation alongside complaints of educated unemployment, as graduates queue for government jobs or accept work below their qualifications.

The window will not stay open forever. As fertility falls, the population will age, and the dependency ratio will rise again in the coming decades. Countries that used their dividend well — through schooling, health, women's employment and labour-intensive growth — converted it into lasting prosperity. Those that did not faced a large, frustrated youth cohort. India's dividend is therefore best read as a deadline: the next two decades are when the investments that determine whether it pays off must be made.