OPINION | Gen Z and millennials: Can India earn its demographic dividend?

As India charts its ambitious course towards becoming a developed country, Viksit Bharat, by the centenary of its independence in 2047, its public discourse is dominated by headline-grabbing economic metrics. We celebrate rising GDP rankings, booming financial markets, world-class digital infrastructure, and expanding geopolitical heft across the Indo-Pacific. More importantly, India’s rise is no longer merely an economic narrative; it is an important geopolitical objective which should help achieve its rightful place in the world of the future.

As the world’s fifth-largest economy and its most populous nation, India seeks to participate more significantly in the international order by becoming a rule-shaper rather than a rule-follower—a trusted global manufacturing powerhouse, an innovation crucible, a net security provider, and an indispensable voice in global governance.

However, a sober reality underpins these strategic ambitions. India’s eventual rise and status will depend less on raw economic output than on a single, decisive variable: its ability to transform the world’s largest cohort of young people, its Gen Z and millennials, into a productive and contented workforce.

Demographic window of opportunity

India currently enjoys a demographic window of opportunity that few nations in human history have possessed. Nearly 68 per cent of its population falls within the working-age bracket of 15 to 64 years, with a median age of just 29. Compare this to the greying industrial powers of the West and East: the median age is approximately 39 in the United States, 40 in China, 45 across much of Europe, and nearly 49 in Japan. While the developed world faces acute labour shortages, shrinking tax bases, and ballooning pension costs, India’s demographic window will remain wide open until roughly 2045.

Yet history offers a stark warning: demographic advantage is not destiny. A large, youthful population acts as an engine of unprecedented national prosperity only when it is educated, healthy, skilled, and productively employed. Left unguided, uneducated, and jobless, that same demographic mass can swiftly invert into a catalyst for chronic underemployment, deepening inequality, social friction, and political instability. The uncomfortable question confronting Indian policymakers is both urgent and straightforward: Can India convert its demographic dividend into true national power before it turns into a demographic liability?

Creating suitable jobs – the primary challenge

Every year, India adds an astonishing 7 to 12 million young people to its working-age population. In theory, this steady influx should grant the country an unbeatable cost and productivity advantage over rapidly ageing economic rivals.

In practice, India’s labour market reveals a deeply troubling structural dichotomy. Unemployment among educated youth and recent university graduates remains persistently high, frequently surpassing 25 per cent in official and independent labour surveys. This points to an alarming mismatch between what educational institutions teach and what a modern, competitive economy requires. Worse still, for millions of those who do find work, underemployment remains the norm.

Nearly 45 per cent of India’s total workforce remains tied to agriculture, even though the sector contributes barely 15 to 16 per cent to the national GDP. This massive structural imbalance is a classic illustration of disguised unemployment: millions of hands working on farmlands yield low productivity and stagnant real incomes. The central policy challenge for New Delhi is therefore not simply creating "jobs" in the abstract—it is creating high-quality, formal, and productive employment at scale.

Education: The illusion of access - without quality

To understand why the labour market is so severely mismatched, one must look closely at the classroom. Over the past two decades, India has reportedly achieved success in expanding access to better education. It is claimed that primary school enrolment has reached near-universal levels, and gross enrolment in higher education has climbed to roughly 29 per cent, with the National Education Policy targeting an aggressive 50 per cent by 2035.

Today, in terms of numbers, India boasts one of the largest higher education ecosystems on Earth, encompassing more than 1,100 universities and over 45,000 colleges. Yet corporate recruiters, industry bodies, and international analysts consistently report that a vast proportion of graduates arrive at the workplace fundamentally unprepared for modern employment.

Year after year, national and international learning assessments highlight grave deficits in basic foundational literacy, language skills, numerical reasoning, analytical problem-solving, and professional communication among school-leavers. Thousands of engineering institutions churn out graduates who lack basic industry-ready coding or technical competence, while traditional humanities and science graduates frequently lack rudimentary digital literacy.

India has reportedly solved the problem of educational quantity. It is now constrained by a crisis of educational quality. Unless primary, secondary, and tertiary learning outcomes improve dramatically, packing millions more students into lecture halls will produce diplomas, not human capital.

The vocational gap: A missing link in the chain

If basic education is the foundation, vocational skilling is the bridge to the economy. It is here that India faces perhaps its most acute vulnerability. Industrial giants like Germany, Switzerland, and South Korea built their manufacturing prowess on deeply institutionalised, highly respected dual-vocational training systems where up to three-quarters—or in Korea's case, nearly all—of young adults receive structured vocational instruction. In stark contrast, only a tiny fraction of India's total labour force, estimated at roughly 3 to 5 per cent, has received formal vocational or technical skill training.

While state-backed initiatives report having successfully trained millions, industry leaders continue to report severe shortages of skilled technicians. Critical bottlenecks exist across advanced manufacturing, precision construction, green logistics, defence production, semiconductor assembly, and renewable energy installation.

As cutting-edge technologies—artificial intelligence, robotics, industrial automation, and clean technologies—rapidly reshape global trade and manufacturing, the shelf-life of human skills is shrinking. Without continuous, lifelong reskilling mechanisms, today’s employable worker risks becoming tomorrow’s unemployable casualty of progress.

Passing on the value advantage

India’s youth have a sharp sense of democratic values thanks to the country’s struggle for independence from colonialism. To that extent, while India’s youth tend to speak out in the face of wrongdoing and inefficiency, they must hone their democratic values - of integrity, respect for the Constitution, tolerance, compassion, accountability, gender equality, peaceful dialogue, and respect for diversity - if it is to become a force of good. They should reject violence, corruption, misinformation, and divisive politics, while actively participating in nation-building through informed citizenship and community service.

Equally, the responsibility rests with parents, teachers, public institutions, and above all, political leaders, to lead by example. Ethical conduct, civility in public discourse, transparency, respect for the rule of law, and unwavering commitment to truth and national interest are the strongest lessons they can impart to inspire responsible and principled future generations. If the elders set the wrong example by normalising corrupt practices, they would have to share the blame for how the youth are negatively impacted.

Health: The unseen bedrock of human capital
 

Human capital cannot be built solely on textbooks and training centres; it relies fundamentally on physical and mental well-being. A nation cannot out-compete its peers if its workforce is chronically undernourished or burdened by preventable disease.

India has undeniably made commendable strides in expanding public healthcare access. Life expectancy has steadily risen, maternal and infant mortality rates have dropped, and programs like Ayushman Bharat have extended health insurance coverage to hundreds of millions of economically vulnerable citizens.

Yet structural underinvestment persists. India’s public healthcare expenditure continues to hover at roughly 2 per cent of GDP—far below the 4 to 6 per cent allocated by many peer emerging economies.

The quiet economic tax of this gap is staggering. High rates of early childhood stunting permanently impair cognitive development, placing an invisible ceiling on future workforce capability. Persistent nutritional deficits and anaemia disproportionately impact women, curbing overall labour productivity. Furthermore, surging rates of diabetes, cardiovascular diseases, and hypertension strike workers during their peak earning years, causing lost workdays and devastating out-of-pocket medical expenditures that push families back into poverty.

Public health is not a passive welfare expense—it is a foundational economic investment.

Women: India’s greatest untapped growth engine

No single metric illustrates India’s unrealised economic power more vividly than its low female labour force participation. Despite modest gains in recent years, tens of millions of educated, capable Indian women remain outside the formal workforce.

This exclusion stems from systemic structural hurdles. Inadequate institutional childcare and eldercare force qualified women into full-time unpaid domestic labour. Safety concerns and limited safe public transport restrict physical mobility and shift-work flexibility. Meanwhile, deep-seated social norms continue to discourage post-marriage formal employment across many communities.

Global economic modelling consistently shows that bringing Indian female workforce participation closer to international standards could unlock trillions of dollars in GDP growth over the coming two decades. Simply put: no nation can ascend to global economic leadership while leaving nearly half of its talent pool underutilised on the sidelines.

The growth vs jobs paradox and the brain drain dilemma

Even as India registers headline GDP growth rates that outpace most major economies, that growth has struggled to generate a proportionate expansion in high-quality jobs.

The manufacturing sector—traditionally the engine that absorbed surplus rural labour in East Asia's economic miracles—has expanded slower than planned. Despite promising initiatives like the Production Linked Incentive schemes, manufacturing’s share of India’s GDP hovers around 16 to 17 per cent. This falls well short of the 25 to 30 per cent levels achieved by China, South Korea, or Taiwan during their peak transformation years.

Meanwhile, India’s world-class services sector continues to generate high-paying jobs for urban, highly educated specialists, but offers limited pathways for semi-skilled workers transitioning out of agriculture.

This internal mismatch is further compounded by a steady brain drain. Every year, hundreds of thousands of India’s brightest minds head overseas for higher education and advanced careers. While the global Indian diaspora remains a potent source of soft power, remittances, and strategic influence, their departure exposes persistent domestic deficits in research infrastructure, compensation scale, and overall quality of life. Talent should leave India out of ambition and choice—not out of professional necessity.

A strategic roadmap towards 2047

To ensure the demographic clock works for India rather than against it, policymakers must execute a multi-front reform strategy with urgency:

1. Shift from access to outcomes in education: Operationalise suitably the National Education Policy, based on outcomes or lessons learnt, to strengthen foundational literacy across states. Move aggressively away from rote learning toward critical thinking, problem-solving, and digital fluency, supported by radical upgrades to teacher training.

2. Dignify and modernise vocational training: Elevate vocational education to parity with academic degrees. Incentivise private enterprise to co-design curricula, fund state-of-the-art apprenticeships, and certify technical competencies in fast-growing sectors.

3. Pursue labour-intensive manufacturing: Broaden industrial policy beyond capital-intensive high-tech sectors to aggressively support skilled labour-absorbing industries, including textiles, leather goods, food processing, logistics hubs, and defence components.

4. Scale public health funding to 2.5–3% of GDP: Direct increased healthcare spending toward primary healthcare centres, childhood nutrition programs, preventive health screenings, and mental health support.

5. Institutionalise female workforce integration: Build safe public transport networks, expand subsidised neighbourhood childcare centres, mandate flexible working arrangements where feasible, and enforce strict equal-pay laws.

6. Build premier R&D ecosystems: Dramatically increase national R&D expenditure to fund world-class laboratories, doctoral fellowships, and innovation clusters capable of keeping top researchers and innovators at home.

India's defining test

Demographic windows open only once in the lifetime of a nation—and they close far quicker than anticipated. Within two short decades, India's age structure will begin its inevitable shift toward an ageing demographic, echoing the structural headwinds currently confronting East Asia and Europe.

The ambition to build a ‘Viksit Bharat’ by 2047 will not be judged by shiny infrastructure or international summit declarations. It will be decided by whether an average young citizen in a tier-3 city or rural district has access to high-quality schooling, job-relevant skills, reliable healthcare, and a dignified career path.

The demographic dividend is not an automatic birthright; it is a finite resource that must be systematically earned. If India rises to this challenge, it will assemble an engine of human productivity capable of driving global growth for the rest of the twenty-first century. If it stumbles, today's vibrant demographic opportunity risks devolving into tomorrow's socio-economic crisis. The choice remains within India's grasp—but the clock is ticking.

(Lt Gen Philip Campose (Retired) is a former Vice Chief of the Indian Army. He has authored a book titled ‘A National Security Strategy for India: The Way Forward’)

(The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.)