India Must Refrain from Allowing the West to Exploit its Demographic Dividend. Here’s why?

• In most Western European countries, the fertility rate is well below the replacement level of 2.1 children per woman, a trend that has been consistent over several decades and many countries struggling to reverse it.
• Indian immigrants are generally considered law-abiding and have a strong track record of integration and contributions to the societies of many Western countries.
• India must not become the donor of educated and skilled labour to the West and instead must utilise this workforce to drive innovation, increase productivity, and attract investment.

A few days ago, Prime Minister Narendra Modi met visiting German Chancellor Olaf Scholz. After the meeting was over, many people in India rejoiced as Berlin decided to increase the number of visas for skilled Indians from 20,000 to 90,000 per year.

At the 18th Asia-Pacific Conference of German Businesses, Modi said: “Two of the world’s leading economies, together we can become a force for global good, and the Focus on India document provides a blueprint for this. In this, Germany’s holistic approach and commitment to pursuing the strategic partnership are evident. Especially noteworthy is the trust that Germany has expressed in the skilled workforce of India. Germany has decided to increase the number of visas for skilled Indians from 20,000 to 90,000 per year. I am confident that this will further boost Germany’s economic growth.”

However, should Indians rejoice or look at this development as a threat to our quest for development and progress as we lose a skilled workforce? 

Demographic Challenges of Germany

Western Europe, particularly its most industrialized country Germany is currently facing significant demographic challenges due to declining birth rates, an ageing population, and, in some cases, insufficient levels of immigration to offset population decline. For countries like Germany, there is no dearth of people wanting to emigrate but in the last twenty years, they willfully allowed mass immigration of unskilled people who are now a burden on its economy.

Already this demographic shift has reared its ugly head leading to broad social and economic implications, affecting everything from workforce availability to public pensions, social services, and overall economic growth. In most Western European countries, the fertility rate is well below the replacement level of 2.1 children per woman. For example, Germany, Italy, and Spain have some of the lowest birth rates in the region, often averaging around 1.3 to 1.5. This trend has been consistent over several decades, with many countries struggling to reverse it.

Various factors contribute to this decline, such as the trend of delaying marriage and childbirth, the high cost of raising children, and a preference for smaller family sizes. Women in Western Europe are also more likely to prioritize careers, as gender roles evolve, and many couples face challenges related to housing affordability, job insecurity, and work-life balance. 

Improved healthcare and quality of life have led to increased life expectancies, which means a growing proportion of the population is elderly. For instance, Italy and Germany have some of the highest percentages of people over 65 in Europe. As the number of retirees grows relative to the working-age population, the dependency ratio (the ratio of dependents to workers) rises. This places a strain on social services, particularly healthcare and pension systems, which are typically funded by the contributions of the current workforce.

Sharing its Demographic Dividend or Skill Donor for the West?

Countries like Germany are increasingly turning to immigration to fill labor gaps and India is now in its crosshair. There is however political opposition to large-scale immigration but the plain fact is, that India has a large pool of educated and talented people who can fill this gap and at the same time have no difficulty in assimilation and are not a national security threat, unlike other immigrants who have not assimilated into the German society and have proved multiculturalism only works when the right people are let in. 

Also, Indian immigrants are generally considered law-abiding and have a strong track record of integration and contributions to the societies of many Western countries. In terms of crime statistics and security, studies and reports often show Indian immigrant communities as low-risk relative to other groups, both in terms of criminal activity and involvement in security-related concerns. 

Germany is looking at long-term solutions which will likely require a combination of policies to address both low birth rates and the need for a sustainable workforce through migration and productivity gains. For many Indians who are recent tech graduates, Germany is an ideal country for immigration that will allow them to lead a lifestyle that few in India can afford.

How can India prevent the Pilferage of its skilled manpower?

India’s demographic dividend refers to the economic growth potential that can result from shifts in a country’s age structure, specifically when the working-age population (15-64 years) becomes larger than the non-working-age (young and elderly) population. With over 65% of India’s population under 35, the country is uniquely positioned to leverage this young, dynamic workforce to fuel sustained economic growth. However, taking advantage of this opportunity requires strategic action to build the necessary infrastructure, education, and employment opportunities.

However, for India to develop we must invest and evolve a skilled workforce designed to drive innovation, increase productivity, and attract investment. We need to create the right environment, India could become a major economic powerhouse globally and for that, we simply cannot allow this brain drain.

Our focus should be on quality education to help create a skilled workforce. Initiatives like Skill India and National Education Policy (NEP) 2020 are steps in the right direction, but continuous focus is needed on STEM fields, vocational training, and digital literacy. Programs must bridge the gap between education and the skills demanded by the job market develop world-class research infrastructure and increase R&D expenditure, fostering a culture of entrepreneurship.

India needs to focus on labour-intensive sectors like manufacturing, which can absorb large numbers of workers. Incentives for private sector investments and programs to foster entrepreneurship, like Startup India, can drive job creation. Additionally, growth in infrastructure, agriculture, and green energy sectors can provide diverse employment opportunities.

With rapid digitalization, India can create a tech-savvy workforce suited to emerging markets in AI, data science, and digital marketing. Initiatives like Digital India aim to make India a hub for digital innovation, expanding job markets in both urban and rural areas. As people migrate to urban centres for better jobs, India must improve urban planning, infrastructure, and public transportation. Ensuring affordable housing and modernized public services will support a stable, efficient, and productive workforce.

Conclusion

India cannot be the donor of educated and skilled labour to the West as it is a fact that most Indian immigrants, come with a good education, often possessing degrees in fields like technology, engineering, medicine, and business. Indian immigrants have high employment rates and are often found in stable, well-paying jobs. But the clincher for the West is that the Indian community’s likelihood of involvement in criminal activities is practically nil.

One can argue that India consistently ranks as one of the world’s largest recipients of remittances, and Germany giving ninety thousand visas each year will further increase remittance. According to the World Bank, India received a record high of $111 billion in remittances in 2022. But do such remittances benefit India or Germany? How long this windfall in remittance can continue and who will benefit in the long run?

India’s demographic dividend is both a tremendous opportunity and a responsibility. For India to grow, the success hinges on a coordinated approach involving policy reform, public and private sector collaboration, and long-term investments in education, healthcare, and infrastructure. Otherwise, we will lose a significant pool of talent and youth to the West and they will be contributing to their economic development.

References:

• _{^[1] https://www.destatis.de/EN/Themes/Society-Environment/Population/Births/_node.html}
• _{^[2] https://www.euronews.com/health/2024/09/28/europes-fertility-crisis-which-european-country-is-having-the-fewest- babies#:~:text=Fertility%20rate%20(2022)&text=Slightly%20higher%20fertility%20rates%20were,%2C%20and%20Finland%20(1.32).}
• _{^[3] https://www.policycircle.org/opinion/brain-drain-in-india/}
• _{^[4] https://www.worldbank.org/en/news/press-release/2022/11/30/remittances-grow-5-percent-2022}

Balaji Subramanian

_{Balaji is a freelance writer with an MA in History and Political science and has published articles on defence and strategic affairs and book reviews. He tweets @LaxmanShriram78. Views expressed are the author’s own.}