India’s demographic dividend or disaster? Mismanaged factors of production—Land, labor, infrastructure, cities

Abstract

India entered its so-called demographic dividend around 2005—expected to last until 2055. India has already utilized almost a third of the period of its demographic dividend—it saw a period of explosive growth from 2003–2012—but has not been able to sustain that growth. And since 2012, growth has generated less and less employment, as it has turned inward, and so it is not helping the working-age population get usefully employed. The labor force participation rate for women has been low and is now falling. What can be done to use India’s underlying factors of production better to generate greater, more inclusive, and sustained prosperity for its citizens? These second-generation reforms are not easy, as they need cooperative federalism and much broader consensus, but without them India’s demographic dividend may become a disaster.

Economic Planning in India: Did We Throw the Baby Out with the Bathwater?

“…There are many factors responsible for this from complex labour laws to problems in land acquisition and access to capital, which have raised costs to industry and are spelt out in greater detail in Chhibber (2021). In addition, as argued by Mehrotra (2020) , India reduced its tariffs very substantially since 1991 but along with its Free Trade Agreements led to the creation of Inverted Duty Structure (IDS) in many key manufacturing sectors, which have hurt its competitiveness and forced India to reverse course and increase tariffs.…”