The Economic Survey of 2007-08 presented in the Parliament today by finance minister, P Chidambaram, states that if India can get the skill development act right, the country will be harnessing a "demographic dividend".

The proportion of working age group of 15-64 years will increase steadily from 62.9 per cent in 2006 to 68.4 per cent in 2026. For actual tapping of the "demographic dividend," it will be necessary not only to ensure proper health care but also to place a major emphasis on skill development and encouraging labour intensive industries.

The projected decline in the dependency ratio (ratio of dependents to the working age population) from 0.8 in 1991 to 0.73 in 2001, to a sharp 0.59 by 2011 is another factor that works to the country's advantage.

This decline contrasts sharply with the demographic trend in the industrialized countries, as well as in newly industrialized nations such as China, where the dependency ratio is rising.

A low dependency ratio gives India a comparative cost advantage and will result in improving competitiveness.

The survey points out that an extra thrust needs to be imparted to the creation of a pool of skilled persons in appropriate numbers, with adequate skills that match user expectations in industry, trade and service sectors.

Such a thrust is necessary to support the employment expansion that would result because of inclusive growth, including the shift of surplus labour from agriculture.

On the flip side, the survey cautions that if skills are not adequately created India could well face a "demographic nightmare."