UNFPA’s State of World Population Report 2023, released on Wednesday, triggered the population growth debate globally and in India. With an estimated population of 142.86 crore by the middle of 2023, India is projected to surpass China’s population of 142.57 crore—by an excess of 2.9 million. Given the inadequate data for India and China, especially in the absence of the 2021 Indian Census, the UN didn’t reveal the exact date when China will hand over the baton of the “most populous country” to India. Mid-2023 is a crude approximation, yet our best guess. This change in demographic rank order will occur four years earlier than the previous prediction for 2027.
Although this debate is not new, alarmist views see this change as resulting in a dystopian future for India. Therefore, population control is widely seen as a panacea to avoid a grim future.
To understand India’s new status, we need to take a closer look at two aspects: (1) demographic conditions, i.e., rate of fertility decline, nature of population growth and its composition and (2) socio-economic, health and political environment.
India completed its fertility transition within 45 years—one of the fastest in the world, only next to China’s 29 years among the major countries. Currently, India’s total fertility rate is 2.0, which means that on average, two children are replacing their parents, which is also an ideal condition for population stabilisation. India has now achieved replacement-level fertility. But it continues to add significant numbers due to its young population. India’s population is growing, though slowly.
Population is often viewed only through the consumption angle. However, population is a resource that is the key to production and consumption, considered the two engines of an economy. However, the story surrounding our demographic conditions can’t be understood wholly based solely on population size. It rather depends on the population’s age composition.
The age structure, as provided by the UN Population Prospects 2022 for India, suggests that the country is currently passing through a “window of demographic opportunity”, where its working-age population (15 to 64 years) share is considerably greater compared to its dependent population (0–14 years and 65+ years). Currently, 68% of India’s total population is between the ages of 15 and 64. About 25% is between 0–14 years, and 7% is above 65 years. This is a vast “demographic bonus” for the country. With a considerable share of the working population, India can harness the opportunity to rise as an economic superpower, supplying more than half of Asia’s potential workforce over the coming decades.
However, this favourable demographic condition (a demographic dividend) will only be available until 2061. Moreover, the availability of the “demographic dividend” will not automatically result in an “economic dividend”; such a transition needs a favourable socio-economic, health and political environment.
Scientific studies suggest that the conversion of demographic dividend into economic dividend during the demographic window of opportunity is conditional on four aspects: employment, education and skills, health conditions and governance.
Employment or job creation is important to translate demographic bonuses into an economic dividend. If India can generate sufficient quality jobs for its bulging working-age population, the realisation of a demographic dividend will become a reality.
Education, skills generation and ensuring a healthy life span by preventing diseases and disabilities are important channels that translate demographic opportunity into economic gains. A skilled and healthy workforce is critical not only for better productivity in economic activity but also reduces excessive public spending, thereby aiding in greater capital creation.
Good governance, reflected through conscientious policies, is another crucial aspect for reaping the demographic dividend as it helps create a healthy environment for increasing the efficiency and productivity of the population.
A substantial demographic bonus is having a large working-age population for the next 35 years or more. Its significance is amplified as we notice that populations are shrinking globally. Over 80 countries worldwide suffer from shrinking population size due to very low fertility, and 55 have introduced pronatalist measures to increase their birth rates. These measures have proven to be largely ineffective. South Korea and China are classic examples of this inefficacy, as they now find it challenging to encourage couples to have more children.
Thus, India has an opportunity to emerge as a global production and consumption market with lesser production costs due to relatively lower labour costs. This is already evident across the IT and pharmaceutical sectors.
Our previous research has shown evidence of increasing private (postal and bank) savings due to an increase in the working-age population. We found that a 1% rise in working-age population share leads to a 5% increase in per capita income, given that the socio-economic policy environment is conducive for the demographic dividend to blossom. By 2061, favourable demographic changes alone have the potential to provide an additional 43% rise in per capita GDP. Our estimates suggest that a total fertility rate below 1.8 is not economical for India. Thus, strong-arm population control measures can lead to forced greying of the population, resulting in the country ‘getting old before getting rich’.
India needs policies to promote a conducive environment that enables quality education, good healthcare, decent employment opportunities, good infrastructure and gender empowerment. This will also allow the country to reap a demographic dividend and achieve faster economic growth. Investment in family planning and health alone have a cost-to-revenue ratio of 1:120, meaning a one-rupee investment gives a return of 120 rupees.
Discussions are abuzz that becoming the most populous country may strengthen the nation’s status geopolitically and reinforce India’s claims to permanent membership in the UN Security Council. This will further the opportunity to enhance international trade relations to boost our economy. If we are successful in reaping the available demographic bonus, we can ensure the prosperity of our people. However, if we fail, our “demographic dividend” can become a “demographic disaster.”
Srinivas Goli
Associate Professor, Fertility and Social Demography at International Institute for Population Sciences (IIPS), Mumbai