Demographic Growth: A Double-Edged Sword to India’s Economy

Introduction

In the 21st century, a notable trend of negative demographic growth has emerged across various regions of the world. This phenomenon, characterized by factors such as wars, mass migrations, and declining fertility rates, has resulted in a steady decline in the overall rate of population growth. Consequently, a significant number of countries have experienced a decrease in their population size or are currently at risk of entering a phase of negative demographic growth. With approximately 38 countries affected by this trend, the global population landscape is undergoing significant transformations with implications for social, economic, and geopolitical dynamics.^[1]

Demographic Shifts of the Global Population

In examining population growth rates across various countries, significant disparities become apparent. According to the UN, the global Fertility rates are declining, and the population is becoming more urbanized. It also states that the demographic shift will result in a greater number of elderly individuals compared to children under 5 years old. The report suggests that Nine countries, namely India, Nigeria, Pakistan, the Democratic Republic of the Congo, Ethiopia, Tanzania, Indonesia, Egypt, and the United States, are projected to contribute to half of the global population growth by 2050 and other countries, in some way, are experiencing population decline. The report also state that the Sub-Saharan Africa’s population is expected to double, while Europe’s population is likely to decline.[2] With respect to the above-mentioned statistics, the following table and graph becomes relevant:

The sluggish demographic growth and elevated median age contribute to a society characterized by a larger proportion of elderly individuals compared to younger age groups. This imbalance in the workforce can lead to reduced productivity levels and economic deceleration. Consequently, it places increased burdens on future generations and the state.

Demographic shift – A Double-Edged Sword

Demographic growth can have both positive and negative consequences, presenting a double-edged sword. It has the potential to alleviate or exacerbate existing disparities. For instance, China, in the wake of its economic reforms in 1978, effectively harnessed its human capital, resulting in rapid economic growth and eventually becoming the world’s second-largest economy by GDP. This progress has also been accompanied by improved living standards. The effective utilization of human capital can play a pivotal role in eradicating poverty and enhancing overall quality of life. However, it is important to acknowledge the practical challenges and feasibility associated with achieving such optimal utilization.

Analyzing the Demographic Shift in India

The demographic growth in India is expected to have a pervasive impact on various segments of society. It is anticipated that the numbers of affluent, middle-income, and socio-educationally influenced groups will witness an increase. Conversely, the least well-off groups, who possess minimal resources beyond their labor power, are likely to experience a substantial rise. According to a report by Oxfam, the bottom 50% of India’s population holds a mere 3% of the country’s wealth.^[5] According to the baseline report of the Multidimensional Poverty Index (MPI) for 2021 released by NITI Aayog, it has been determined that 25.01% of India’s population is categorized as multidimensionally poor. This information was conveyed through a written reply provided to the Rajya Sabha.^[6]

India’s population age cohorts are 0-14 years 25%, 15-64 years 65%.^[7] Due to its youthful population, India possesses a significant workforce, which can potentially position the country as a global leader in various sectors such as agriculture, industrial supplies (both raw and processed), and the service industry. However, realizing this potential requires a robust market and emphasis on skill development through quality education. Unfortunately, the Indian subcontinent is currently grappling with the repercussions of the unprecedented COVID-19 crisis and flawed policy decisions. This has led to concerning issues such as a soaring unemployment rate of 8.11% (according to the Centre for Monitoring the Indian Economy), high inflation, and a widening trade deficit. Recent trends indicate a 14% decrease in imports and a 12.7% contraction in exports, which is causing sustained market apprehension.^[8] Unemployment and unstable markets directly stress the output growth affecting the purchasing power thus distressing the poor livelihoods.

Literacy and skill education are critical issues in India, with approximately 90% of the workforce consisting of low-skilled labourers. Furthermore, digital literacy in the country is estimated to be no more than 30-35%. Shockingly, only 25% of Indians possess the ability to perform basic tasks such as moving or copying folders on a computer, and a mere 6% of individuals aged 15 and above have the skills to use spreadsheets effectively. These statistics highlight the pressing need for improved literacy and skill development initiatives in India.^[9] In the age of artificial intelligence and a globalized market, having a favourable skill education environment is crucial for India to establish itself as an efficient producer. It is essential to prioritize the education and skill training of the younger generation (aged 0-14 years) as they are the future workforce. Despite an increase in funds compared to previous years, the budget allocation for education in India did not make it to the top 10 list, highlighting the need for greater emphasis on skill development. The quality of the workforce is a determining factor for India’s position on the global stage. Merely having a large quantity of workers without adequate skills will be ineffective in a growing economy.

Examining Population Control Policies in India

Population growth is closely linked to both consumption and production growth. Initially, an increase in population necessitates a higher level of subsistence and basic needs, which can only be met through increased production. This production, in turn, requires material and manpower resources, creating a cyclical process. Any disruption or imbalance in this cycle can have severe consequences, leading to challenges in meeting subsistence, housing, food, and land scarcity.

The existence of a surplus labor force is often associated with favouritism or cronyism. The presence of this surplus labor force tends to drive down real wages, reduce job security, and diminish labor rights. Implementing measures to control population growth, such as lowering fertility rates, can result in an increase in the median age. Consequently, the labor force will not remain as young, and failing to fully utilize and employ this valuable opportunity will be a regrettable historical outcome.

Taking the aforementioned into consideration, it is vital to note that in 2021, the governments of Assam and Uttar Pradesh had proposed two-child policies which prohibited individuals with more than two children from availing government benefits and positions. While India does not have a national two-child policy like China, several states had implemented their own versions, and Assam and Uttar Pradesh had aimed to join that list. Over the past two decades, various state governments in India, including Madhya Pradesh in 2001, Telangana, Andhra Pradesh, Gujarat in 2005, Maharashtra, Uttarakhand, Odisha, Bihar, Assam, and others, have attempted to implement the two-child norm. The aim was to link it with government welfare programs and eligibility for participating in legislative elections. However, the implementation of such norms has faced legal challenges on multiple occasions.^[10]

The Uttar Pradesh Population (Control, Stabilization and Welfare) Bill, 2021, was introduced to control and stabilize the state’s population. The bill includes provisions to disqualify candidates with more than two children from local polls and restrict government job promotions and subsidies for those with more than two children. Public servants adhering to the two-child norm would receive benefits such as additional increments, extended parental leave, and increased pension contributions. The bill also aims to establish maternity centers, track population data, and introduce population control as a compulsory subject in secondary schools. Implementation of the bill will be carries by the creation of a State Population Fund.^[11]

Furthermore, Assam’s Chief Minister, Himanta Biswa Sarma, has announced the gradual implementation of a two-child policy for accessing state-funded benefits. The policy will not apply to central government schemes but will be extended to all state government schemes. In 2017, Assam introduced a Population and Women Empowerment Policy mandating government officials to adhere to the two-child norm. The proposed policy aims to make the two-child rule mandatory for availing government benefits, except for Scheduled Caste, Scheduled Tribe communities, and tea garden workers who will be exempt.^[12]

However, it is important to understand that population control laws are not the ultimate answer, especially for all Indian States. Population is not a static concept, it is innately dynamic, therefore population control measures require time to time revision based on the recent trends. For instance, Maharashtra, which constitutes a significant portion of the country’s population, has experienced a notable decline in population growth. According to NFHS 4 (2015-16), the percentage of children under 15 years old relative to Maharashtra’s total population declined from 30.6% in 2005-2006 (NFHS 3) to 24.5% in 2015-16. The fertility rate, measuring the average number of children per woman, also decreased from 2.1 to 1.9 during this period. Consequently, considering these statistics, it can be argued that Maharashtra may not require population control laws.^[13]

Way Forward

True growth goes beyond demographic indicators or selective economic measures. It lies in creating a society that provides a dignified life and a better future for generations to come, instead of perpetuating extreme wealth concentration on one end and widespread deprivation on the other. Mere reliance on opaque numbers and statistics fails to capture the true suffering caused by poverty and inadequate living conditions. India requires comprehensive reforms that address the multidimensional challenges faced by its population. The optimal utilization of human resources, coupled with advancements in technology, along with a focus on education and skill development, will uplift living standards and foster a prosperous society. It is essential to prioritize the collective well-being and ensure that the benefits of growth are shared by the masses.

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^[1] Ref: Geographyhost.com

[2] https://www.un.org/en/un75/shifting-demographics#:~:text=The%20world’s%20population%20is%20expected,fertility%20rates%20continue%20to%20decline.

[3] https://data.worldbank.org/indicator/SP.POP.GROW?locations=RU

[4] https://data.worldbank.org/indicator/SP.POP.GROW?locations=RU

^[5] Ref: The Indian express dated on 7/4/2023.

^[6] Ref: Economic times dated on 12/12/2023.

^[7] Ref: According UNFPA (daily pioneer.com date: 20/4/2023).

^[8] Ref: Economic times dated on 16/5/2023 & The Hindu (data point) dated on 25/5/2023.

^[9] Ref: The Hindu (topic: Access to facilities and basic IT skills) dated on 20/3/2023.

[10] Mishra CM, Paul S. Population control bill of Uttar Pradesh (two-child norm): An answer to population explosion or birth of a new social problem? J Family Med Prim Care. 2022 Aug;11(8):4123-4126. doi: 10.4103/jfmpc.jfmpc_2326_21. Epub 2022 Aug 30. PMID: 36352938; PMCID: PMC9638589.

[11] https://www.livemint.com/news/india/twochild-policy-on-anvil-in-uttar-pradesh-assam-what-have-they-proposed-11625917891178.html

[12] https://www.livemint.com/news/india/twochild-policy-on-anvil-in-uttar-pradesh-assam-what-have-they-proposed-11625917891178.html

[13]https://www.hindustantimes.com/mumbai-news/population-control-not-the-panacea-for-all-states/story-tAWuM9TWu2UZsenioqXvfP.html