GS Analyst: Daily Editorial In Brief

Context:

A recent report in the Lancet highlights India's impending demographic shift towards becoming an ‘ageing society’, with projections indicating a significant increase in the elderly population by 2050.

Implications of Demographic Shift:

• Declining Total Fertility Rate (TFR): A sharp decline is predicted in India's TFR to 1.29 by 2050, indicating a significant decrease in the average number of children born to a woman. Consequently, one in five individuals is projected to be above the age of 60 by 2050, posing challenges associated with an ageing population.
• Lessons from Global Experiences:China provided valuable lessons for policymakers, when its working-age population peaked.Now, India must proactively address skill deficits and transform its economy to maximize the demographic dividend.
• Maximizing Demographic Dividend: With India's working-age population expected to peak in the late 2030s or early 2040s, priority must be given to enhancing skills, creating employment opportunities outside agriculture, and fostering growth in the knowledge economy.

Preparing for the Future:

• Ensuring Social Security and Healthcare: Policymakers must prioritize the development of robust social security and healthcare systems to meet the needs of the growing elderly population. Additionally, efforts should focus on effectively utilizing the skills and experience of older individuals to contribute to the economy.
• Addressing Regional Disparities: Regional variations in TFR rates across states in India present unique challenges, with certain regions experiencing accelerated ageing compared to others. Policymakers must adopt a nuanced approach to understand and address demographic shifts at the regional level.
• Planning for Change: It is imperative for policymakers to comprehend the multifaceted nature of the demographic transition and proactively plan for the future. Measures should be implemented to address skill gaps, promote inclusive growth, and ensure equitable access to social services for all segments of the population.

Context:

With the onset of hot weather, concerns about electricity shortages have resurfaced in India. The discussion primarily revolves around the shortage of domestic thermal coal and the challenges in its logistics, leading to potential disruptions in electricity supply.

More about logistics:

• Shortage of Domestic Thermal Coal:The electricity shortage in August 2023, attributed to a poor monsoon, underscored the challenge of meeting increased demand amid reduced supply.
• Insufficient Logistics:Despite ample coal reserves in mines, logistical issues hamper the transportation of coal to power plants.
• Transportation bottlenecks: A Ministry of Power advisory highlights logistical constraints associated with the railway network, emphasizing the need to address transportation bottlenecks.

The Issue of Imports:

• Alternative Sources of Coal:With coal being India's primary energy source, exploring alternative coal sources becomes crucial to mitigate shortages. While some suggest imports as the only solution, auctions by Coal India Ltd. offer another viable option, albeit at higher prices.
• Import Advisory:The Ministry of Power's advisory regarding coal imports, often misinterpreted as a mandate, recommends monitoring coal stocks and importing up to 6% by weight as needed. However, the advisory emphasizes blending coal as per requirements rather than imposing a fixed mandate.
• Cost Implications:Interpreting the advisory as a mandate for 6% coal imports could significantly impact electricity costs, affecting consumers. Increased coal imports elevate variable costs, necessitating careful consideration by regulatory bodies to avoid unjustified cost burdens on consumers.

Generation and Location:

• Diverse Power Plant Characteristics:Power plants vary in generation capacity, proximity to coal mines, and susceptibility to shortages. Pit-head plants situated close to mines are less likely to face shortages compared to plants located farther away.
• Avoiding Misinterpretation:Not all plants require imports, as shortages predominantly affect plants distant from mines.
• Cost effective solutions:Regulatory commissions and utilities should focus on identifying the most cost-effective solutions to address shortages, considering factors beyond defaulting to coal imports.

Context:

A recent report by the Institute for Human Development/International Labour Organisation highlights concerning trends in youth employment in India, signalling a potential waste of the country's demographic dividend without immediate policy interventions.

Grim Youth Employment Scenario:

• Unemployment among Educated Youth: There is a significant rise in unemployment among educated young people, with the proportion of unemployed individuals with secondary education or higher nearly doubling since 2000. Surprisingly, graduates face a much higher unemployment rate compared to those with lower levels of education, indicating a mismatch between job aspirations and available opportunities.
• Quality of Education and Job Criteria: The findings underscore shortcomings in both job availability and the quality of education in India. Despite pursuing higher education, a large segment of the youth remains unqualified for job roles, highlighting the need for reforms in education and training programs to align with industry requirements.
• Stagnating Wages and Economic Outlook: There persists stagnating wages and a bleak economic outlook for the youth. Wage growth has either stalled or declined, exacerbating the challenges faced by young job seekers in securing better-paying employment opportunities.

Closing Window of Opportunity:

• Declining Youth Population Share: India's window to harness its sizable youth population for socio-economic gains is rapidly closing, with the share of young people in the population projected to decline by 2036. This demographic shift underscores the urgency for immediate policy interventions to address youth unemployment and underemployment.
• Gender Imbalance and Informal Employment: The report also highlights significant gender imbalances in labor force participation rates, with women's participation significantly lower than men's. Moreover, a vast majority of workers are engaged in informal jobs, indicating a lack of comprehensive policies to promote formal employment and ensure decent working conditions.
• Need for Policy Focus: The report emphasizes the necessity for a concerted policy vision aimed at creating better job opportunities and improving the quality of education and training for India's youth. As the country enters the election cycle, policymakers must prioritize addressing youth employment challenges to realize the full potential of India's demographic dividend.