Discuss how the demographic dividend influenced the economic growth trajectories of India and Sri Lanka between 2010 and 2020, mentioning specific policies that each country adopted to harness or manage the dividend.
Answer
India leveraged its demographic dividend by expanding formal employment, improving education, and encouraging investment, leading to robust growth, whereas Sri Lanka struggled with high youth unemployment and insufficient skill development, resulting in slower growth.
Step-by-step solution
- Define the demographic dividend as the temporary boost in economic growth when a large share of the working age population enters the labor market.
- Describe India’s policies: the National Skill Development Mission, expansion of formal employment under the Mahatma Gandhi National Rural Employment Guarantee Act, and investment incentives for manufacturing.
- Describe Sri Lanka’s policies: the Youth Employment Creation Programme and the Skill Development Fund, noting limited uptake and skill mismatches.
- Compare growth outcomes: India’s GDP growth averaged 7% in the decade, while Sri Lanka’s averaged 4%.
- Conclude that India’s proactive policies allowed better utilisation of the dividend, whereas Sri Lanka’s less effective measures resulted in slower growth.
Common mistake: Failing to link specific policies to observed growth outcomes
Concept tested: Demographic dividend impact
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