China is projected to hand over the baton of the most populous country to India by mid-2023. But for India, there are greater prospects for demographic advantage than serious concerns. The country must focus on reaping the available demographic dividend.
Considering the limited information for both China and India, especially in the absence of the Census 2021, it is difficult to predict the exact date on which this demographic order will change. United Nation reports suggest that India will have a population of 142.86 crore by mid-2023, which is 2.9 million higher than China’s population of 142.57 crore. So, what are the opportunities and costs from being the most populous country? While the debate on population growth in India is not new, there are general and pessimistic views over this change in demographic rank order. Population control, therefore, is widely being seen as a panacea to avoid a grim future. There is a need to look deeper into the issue from an empirical and scientific perspective. Is it a dividend or a disaster? To answer this, we need to understand: the nature of population growth, size and its composition, as well as mechanisms through which a country translates demographic bonus into economic dividend.
Population growth, size, composition
Population in itself is not a burden. Instead, it is the nature of population growth, size and its composition that decides when a population becomes a “resource” or a “burden”. Population is a resource as long as the country’s carrying capacity is intact. Carrying capacity is not just per capita availability of natural resources; it is a dynamic concept which changes according to changing technology, the efficiency of production and consumption systems of a country.
A deeper look into the trends of population growth, size and composition gives one an idea of whether India has an over-population that can disrupt carrying capacity. With total fertility rate of 2.0 in 2023, India is already at replacement level fertility, meaning two children replacing their parents. This indicates that the population is on a path toward stabilisation. However, it continues to experience positive growth, but in a decelerated mode until 2064, from which point it will become negative growth. The peak of India’s population size will be around 169.6 crore in 2063.
However, if we look at only the total population size, which is often assumed as the number of mouths to feed, it is grossly misleading. We need to look at the age composition of the population which tells us about available support ratios in the form of the number of the working age population (15-64 years) against the dependent population (0-14 years and 65 years and above).
Looking at the population composition of India, there are greater prospects for demographic dividend than a disaster. With 68% of the working age population in 2023, the country continues to have a demographic window of opportunity for the next 35 years to reap an economic dividend.
However, the availability of a demographic window of opportunity in itself will not automatically turn into economic dividend. The country needs to work on the key mechanisms which translate a demographic bonus into economic dividend.
There are four key mechanisms that translate a demographic bonus to economic dividend: employment, education and skills, health conditions and governance.
Employment or job creation is an important mechanism to translate demographic bonus to economic dividend. If India is able to generate sufficient and quality jobs for its bulging working age population, realisation of demographic dividend will become a reality.
Education, skills generation and ensuring a healthy lifespan by preventing diseases and disabilities are also important channels that translate demographic opportunity into economic gains. A skilled and healthy workforce is critical not only for better productivity of an economic activity but it also reduces excessive public spending and helps in greater capital creation.
Good governance, reflected through conscientious policies, is another important aspect for reaping demographic dividend as it helps in creating a healthy environment for increasing efficiency and productivity of the population.
Opportunities and costs are the two sides of the coin when it comes to being the world’s largest populous country. However, a relatively younger population of India provides higher support ratios — there is lesser disease, disability and caring burden. India’s opportunity must be looked at in comparison to the consequences of population decline and ageing across some countries that include Japan, China, the United States and other major economies. A majority of them have been implementing pronatalist policies to improve birth rates. However, these actions have shown to be largely ineffective. Once fertility tends to decline, it is hard to reverse it.
In this context, India has the potential to become a worldwide market for both production and consumption, with lower manufacturing costs due to a relatively cheaper workforce. This is very much evident in India’s IT sector.
Available demographic opportunity in the form of a greater share of the working age population has the potential to boost per capita GDP by an additional 43% by 2061, provided the socio-economic and political enabling environment is conducive.
At the same time, a total fertility rate of less than 1.8 may not be economically beneficial for India. Therefore, drastic population control methods run the risk of inducing forced population ageing, which would result in the nation “getting old before getting rich”.
What is causing more damage than climate change and economic harm is invisible and unsustainable production, consumption and unequal distribution more than visible population size.
What the country needs are policies that support an enabling environment that can provide high-quality education, good health care, respectable employment opportunities, good infrastructure, and gender empowerment. If India falls short in this, its “demographic dividend” can become a “demographic disaster”.
Srinivas Goli is an Associate Professor of Fertility and Social Demography at the International Institute for Population Sciences (IIPS), Mumbai