In the near future India will be the largest individual contributor to the global demographic transition. A 2011 International Monetary Fund Working Paper found that substantial portion of the growth experienced by India since the 1980s is attributable to the country’s age structure and changing demographics. It is predicted that India will surpass China as the world’s largest country by 2025, with a large proportion of those in the working age category. Over the next two decades the continuing demographic dividend in India could add about two percentage points per annum to India’s per capita GDP growth. At the same time, concerns also emerge on how India can potentially take care of the basic minimum living standards from food to water to energy needs going forward. India's population in 2050 is projected to be 1.692 billion people.
During the course of the demographic dividend there are four ways through which the the demographic dividend can be best utilised
1. For Increasing the labour supply. Demographic dividend increases the labour supply. However, the magnitude of this benefit appears to be dependent on the ability of the economy to absorb and productively employ the extra workers rather than be a pure demographic gift.
2. For Increase in savings. As the number of dependents decreases individuals can save more. This increase in national savings rates increases the stock of capital in developing countries already facing shortages of capital and leads to higher productivity as the accumulated capital is invested.
3. In the evolution and development of human capital. Decreases in fertility rates result in healthier women and fewer economic pressures at home. This also allows parents to invest more resources per child, leading to better health and educational outcomes.
4. In increasing domestic demand that is brought about by the increasing GDP per capita and the decreasing dependency ratio.
5. By skilling Indians and imparting employability. This part has the potential to tilt the economic and power balance in the world.
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