October 31, 2024
📰 FEATURE STORY
Will declining fertility rates affect India’s economic growth?
1.4 billion. According to some estimates, that’s India’s population. Is a large population a boon or a bane? It’s a tricky question, and answering it comes with its set of challenges. Are the majority of people of working age or senior citizens? What do the demographics look like? There are many variables to consider.
What if population growth slows down? What if India’s fertility rate declines? Leaders like Andhra Pradesh Chief Minister Chandrababu Naidu and Tamil Nadu Chief Minister MK Staling are worried about these things. Apart from economic growth, the fear is lower fertility rates could translate to diminished political power post-delimitation. How far is this true?
Context
India’s population will peak in the early 2060s at about 1.7 billion before it begins to decline, according to the “UN World Population Prospects Report 2024”.
Right now, India has a few things going for it – it’s the fastest-growing economy with a thriving domestic market thanks to its large population. But there are also things to worry about. Youth unemployment remains high, and the World Bank categorises India as a “lower middle-income country”.
The demographic dividend often discussed concerns the working-age population. The working population of India, i.e. those in the 15-64 age group, comprise 68% of the total. Simply put, the Indian sub-continent will be a region that can provide workers in the future. The rest of the world has an ageing population. To capitalise on this, India should educate and upskill its workforce, including women.
But what if there aren’t enough people? India’s short-term economic growth stands on the shoulders of its 600 million plus labour force. The worry is, what happens when that number begins to decline if people stop having kids?
Indians are no strangers to family planning campaigns and schemes. For decades, the norm has been two kids. Andhra CM Chandrababu Naidu said his government will introduce a law that allows only people with two or more kids to contest local body elections. This was his way of urging families to have more kids since he was worried about the state’s ageing population and its impact on India’s demographic balance.
For the first time, India achieved a total fertility rate (TFR) below replacement-level fertility. TFR is the average number of children born to a woman over her lifetime. The replacement fertility rate is 2.1 – where the population replaces itself from one generation to the next.
In March, a Lancet study said India’s TFR decreased to 1.9 in 2021 and is expected to drop to 1.29 by 2050. That means India isn’t replacing its deaths with new births as the population steadily grows older.
31 states and Union Territories, including all the Southern states, have TFRs below the replacement level. This could lead to negative population growth over a few decades. That has leaders worried. Could India’s economic growth slow down?
VIEW: It’s a real challenge
The 2018-19 Economic Survey anticipated slower population growth. It also warned that age distribution implies that India’s working-age population will grow by about 9.7 million per year from 2021 to 2031 and 4.2 million per year from 2031 to 2041. The “State of Working India” report from last month stated the pace of regular wage job creation has decreased since 2019 due to the pandemic. It’s a worrying sign that India’s demographic dividend could be virtually over.
Policymakers have long lauded the economic benefits that India will reap from its large youth population. That median age is young today but won’t be in the coming decades. Most economists believe an ageing population spells economic trouble. A UN report from last month noted that the number of elders in India will be more than the number of kids younger than 15 years by 2046.
As more elderly people depend on a shrinking working-age population, India will face significant challenges. Developing countries, including India, are seeing lower fertility rates sooner in their development journey than developed ones did in the past. They had much higher per capita income when their populations began to age. India should avoid a Japan or China-like situation where ageing populations have strained their economies. It’s a ticking bomb.
COUNTERVIEW: Not all doom and gloom
An ageing population and lower fertility rates don’t necessarily mean economic disaster. If the working-age population, adequate in number, can be equipped with the necessary capital to boost productivity, then we can breathe easy. A 2017 paper by economists Daron Acemoglu and Pascual Restrepo stated that there’s no strict negative relationship between an ageing population and per capita income levels. In fact, they noted that between 1990 and 2015, per capita income levels in countries with growing ageing populations grew faster than in other countries.
In India, states like Kerala and Tamil Nadu have had TFR levels below the replacement level for a few decades. They’re by no means dwindling economies. Japan is the often-cited example that had below replacement TR for over half a century. But it’s still a prosperous society and certainly more developed than India. Whatever crisis it faced, it overcame it through what most developed countries do – increased technological adoption.
If life expectancy is improving and not quality of life, we’re creating a large segment dependent on the young and the government for more resources. That’s unsustainable. An ever-increasing population is also unsustainable, especially for a country like India, where the distribution of resources is quite uneven and per capita income is too low. A decline in population growth would help increase the amount of capital resources in per capita terms. It would also allow the relocation of resources to educate and skill the younger population now.
Reference Links:
- Why Chandrababu Naidu wants you to make more babies – India Today
- Fertility paradox: India must stay the course on population control – Financial Express
- Declining fertility rates are no longer a Southern problem – Moneycontrol
- Falling fertility rates won’t stop economic growth. See Tamil Nadu – The Print
- Chandrababu Naidu and Stalin are offering incentives to spur a baby boom. Here’s why that won’t work – Scroll
- Falling fertility rates leave India staring at a looming demographic challenge – The Economic Times
- Is this the end of India’s demographic dividend? – Fortune India
What is your opinion on this?
(Only subscribers can participate in polls)
a) Declining fertility rates will affect India’s economic growth.
b) Declining fertility rates won’t affect India’s economic growth.
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