RBI - India Needs to Grow to Capture Demographic Dividend

Published : 26 April 2024
Updated : 23 May 2024
RBI - India Needs to Grow to Capture Demographic Dividend

The recent analysis states that in order for India to profit from its demographic dividend, economic growth must occur at a rate of 8–10% annually over the next ten years. The RBI highlights that maximizing the contribution of India's youthful and expanding worker force to the growth of gross value added (GVA) should be the main goal of the country's developmental strategy for the ensuing decades.

The Growth Pathway 

* India's real GDP has grown at an average yearly rate of less than 6% throughout the last ten years. 

* Even that, after the pandemic economic expansion has surpassed 7%, driven by capital deepening that has boosted the growth path. 

* The RBI says that conditions are in place for the pattern of change that increased the average real GDP growth to above 8% in 2021–2024 to continue. 

Development Approach 

* The RBI highlights that a focus on worker quality will offer the cutting edge of the growth strategy. 

* The foundation of the strategy must continue to be improving employability, with a focus on presenting work possibilities for women and young people.

* Although the usually slow development of worker quality, there is solid proof that between 2017 and 2018, the growth rate of overall worker quality improved. 

Risk of inflation

* The RBI published an advisory that extreme weather and ongoing political tensions might result in inflation.   

* Even in cases when security has been proven, food inflation remains strong and provides a threat to the ongoing path of price decreases.

* Energy shock has lately increased, although the impact of food shock on core inflation has been reducing over time.