India needs to act quickly to utilize the majority of its working-age population and maximize opportunities for accelerated economic growth
Posted Date – Sunday, 5/21/23 at 12:45pm
by Tej Singh Kardam
According to the United Nations Population Fund (UNFPA) in its State of World Population 2023 report, India’s mid-year population is 1,428.6 million, 2.9 million more than China. In the absence of a 2021 Indian census, India, which has grown its population by about 1.6 million a year in recent years, is either already quietly ahead or on track to do so by the end of June, the report said.
India’s population continues to grow while China’s population shrinks. This means that India is now on its way to the throne of the most populous country. It is impossible to extrapolate much about India’s future from population size alone, but in terms of population dynamics, the country needs to act quickly to utilize the majority of its working-age population and maximize the country’s accelerating economic growth Chance.
opportunities and costs
The question is, what are the opportunities and costs of being the most populous country? Population control is widely seen as a panacea for avoiding a grim future. But there is a need to delve deeper into this question from an empirical and scientific point of view. So the main question is whether it’s a bonus or a disaster. Thus, the demographic dividend is the potential for economic growth that may result from changes in the age structure of the population, primarily when the proportion of the working-age population (15-64) is greater than the proportion of the non-working population (14 and under and 65) and the elderly )s population.
More than 80 countries around the world face shrinking and aging populations due to low fertility rates, and more than 50 countries encourage couples to have more children
In this context, let’s look at India’s demographic dividend – whether the population is a resource or a burden depending on its growth, size and composition. India has one of the youngest populations in an aging world. One of the major consequences of India’s demographic shift has been a shift in the age structure of its population towards the working age group relative to the dependent cohort. Since 2018, India’s working-age population has grown faster than its dependent population. The expansion of the working-age population will continue until 2055.
According to a recent report by the United Nations Population Fund, the age composition of India’s population is 0-14 years old – 25%, 15-64 years old – 68%, 65 years old and above – 7%. This shift has occurred largely because of a decline in the total fertility rate (TFR) — that is, the number of children a woman of childbearing age is likely to have — from 5.9 children per woman in 1950 to 2.0 children per woman today child. This means that on average two children replace parents (fertility replacement level), which is an ideal condition for a stable population.
India’s window of opportunity for a demographic dividend, extending until 2055-56, is larger than any other country in the world. A demographic window of opportunity is a period when the proportion of children under 15 and the proportion of people 65 and over fall below 30 percent and 15 percent of the population, respectively. However, this window is available at different times in different states due to different behavior of population parameters, such as southern states that are leading in the demographic transition already have higher proportions of older adults.
About a decade from now, according to official population estimates, there will be a generation gap between North and South India. As the developed southern states age rapidly, the average Tamil will be around 10 years older than the average Bihari. Meanwhile, as fertility rates slowly decline in the north, the average birth rate among Bihari women will exceed that of Kerala women 40 years ago. According to the new census indicators, more than a third of India’s total population growth between 2011 and 2036 will come from just two states — Uttar Pradesh and Bihar — while all southern states will see their share decline. Also, by 2036, Tamil Nadu will be the oldest state with a median age of 40 years and Bihar will be the youngest state with a median age of less than 30 years. By 2036, the median age of Indians will be 34.7 years.
Demographic Dividend
We all know that large populations make reducing poverty and eliminating inequality difficult. However, if we look at it from a progressive perspective, more Indians would mean more production, consumption and higher growth. Research shows that historically, and even more recently, economic growth has been largely attributable to a demographic dividend. The demographic dividend drives the overall growth of advanced economies by 15%. Japan was one of the first major economies to experience accelerated growth due to demographic changes.
In India, which has a large working-age population, the demographic dividend will lead to better economic growth and rapid growth in economic activity. It will help increase the workforce, thereby increasing the overall productivity of the economy. This would increase the female workforce, which could become a new source of economic growth. It boosts the savings rate in the working age group, when most saving is done. It may create more fiscal space for investment in human and physical infrastructure. It will promote the expansion of urbanization – rapid urbanization will contribute to economic growth due to a large number of jobs, more medical facilities, etc.; and industrialization, as more and more people will seek employment.
India’s working-age population accounts for 68% of the total population and will provide more than half of Asia’s potential labor force in the next few decades
India’s working-age population accounts for 68% of the total population and will provide more than half of Asia’s potential labor force in the coming decades. A large working-age population makes India attractive not only in terms of labor market prospects but also because the country can act as a large market for goods and services. Therefore, it is necessary to tap the country’s population window and convert it into economic dividends. To turn the demographic dividend into economic growth, it is necessary to create enough job opportunities, invest in education and skills development, and promote a healthy society.
Although India’s GDP exceeds $3 trillion, it does not create enough jobs. Good governance and collaboration between centers and states is also needed to accelerate manufacturing activities and fully utilize the potential of the country’s working-age population. It must be taken into account that the shift of the population age structure towards the working age group will increase the potential labor supply.
Two-thirds of the country’s population is under the age of 35, a dominance that could last a decade. A growing middle-class consumer market is also attractive to the rest of the world in terms of trade and investment interactions.
The World Bank mentioned that the demographic dividend should come from the majority of the population in the northern and central states of India. Southern states have begun to emulate the demographics of the developed world. It is desirable to have foreign direct investment – it is an important source of job creation. At least for the next three decades or so, the country has a large working-age population, so it has a sizable demographic dividend. Therefore, the country has the opportunity to become a global production and consumption market, with relatively low production costs due to low labor costs.
what is the world like
More than 80 countries around the world face shrinking and aging populations due to low fertility rates, and more than 50 countries encourage couples to have more children, such as Japan, South Korea, China and the United States. But this has proven ineffective because once a downward trend in fertility starts, it is difficult to reverse. Compared to India, China has managed to create a well-educated and healthy workforce.
India’s effective demographic window of opportunity runs until 2041.This is the period when the largest first demographic dividend can be reaped before the burden of aging begins
Thanks to its large educated youth and healthy population, China has become the factory of the world. But now it is facing an aging population that will not be able to support its massive manufacturing activities. Because China implemented the one-child policy for three and a half years, which led to an increase in the elderly population, and then relaxed it to two children in 2016 and three children in 2021. China’s population is expected to shrink by 45 percent by the end of the century, assuming the current fertility rate of 1.3 children per couple is maintained, according to United Nations forecasts.
If India’s total fertility rate is lower than 1.8, although it is higher than China’s 1.3, it does not have an economic advantage. In this case, population control measures will cause the population to age and may cause the country to grow old before it becomes rich. But India is currently in a better position, with a fertility rate of 2.0 and a sizeable working-age population.
India’s effective demographic window of opportunity runs until 2041. This is the maximum period during which the first demographic dividend can be reaped before the burden of aging begins. Favorable demographic change alone has the potential to provide a demographic dividend of more than Rs 1,65,000 in terms of GDP per capita, which equates to an additional 43% of the Population Focus Scenario (Rs 5,48,600) Business as usual scenario” (Rs 3,82,750).
It is necessary to provide high-quality education, good medical care and better employment through policy intervention to obtain a generous demographic dividend and achieve faster economic growth. If the country fails in these aspects, the demographic dividend may turn into a demographic disaster.
(The author is a retired IFS officer)
