The decline in the rate of growth of population leads to reduced expenditures on education, health, food and clothing, in bringing up a large family. This saving can be used to increase investment in factories, shops or tractors. It can also be used to provide higher education to the smaller number of children. This will lead to savings that can be channeled in other productive investments. The poor family can send two children to High School if it does not have to buy food and clothing for four or five children. The Finance Minister has done well to point out that we should make efforts to direct these savings in productive investment if we have to reap this demographic dividend.

This Dividend turns into a Liability in the next period. The small number of children supported by a large number of working adults does not continue for long. The working adults at present turn into large number of aged persons in the next period, and the small numbers of children at present develop into small number of working adults. Small numbers of working adults have to bear the responsibility of maintaining a large number of aged ones. Japan, Europe and United States are passing through this crisis presently. They are facing a huge shortage of working population that can pay taxes to maintain the large number of non-working population. Europe has recently decided to import working age population to meet this shortage.

India is in a vantage position to supply this global need of work force. This export of work force is providing economic benefits to us. Expatriates are remitting huge amounts for the upkeep of their families. The failure of family planning has provided us the economic benefits of remittances from exports of large numbers. India is doubly benefited at present. The rate of birth is declining hence the burden of maintaining children and aged is less and India is reaping demographic dividend. At the same time, the earlier implementation of family planning and reduction in rate of birth is creating a shortage of working population in rich countries and providing opportunities for migration to our people who, though lesser in numbers than previously, are still large in numbers.

The rate of birth is declining in South America as it is in India. However, the higher ratio of working adults has not translated into a demographic dividend. The critical element for turning increasing ratio of working adults into a dividend is the culture of entrepreneurship, not higher education. Fortunately, development of this culture does not require huge investment hence India has large population, lower demographic dividend and high income from remittance.

However, this benefit is cancelled for two reasons. One, the ratio of working to non-working adults declines in the next cycle and the dividend turns into a liability in the end. Secondly, the country is deprived of the benefits of large remittances that come from increased exports of working adults. We have focused more on benefits from export of work force and development of entrepreneurship than on reaping the demographic dividend. The trick lies in producing entrepreneurship at low cost.