Will India’s population milestone precipitate an economic miracle?

According to UNFPA estimates, India’s population has reached 142.86 crore, surpassing China’s population of 142.57 crore and making India the most populated country in the world. While India is expected to add more people, China faces a looming demographic decline as birth rates plunge and its workforce ages. But is the country prepared to convert this pole position into an economic advantage?  

population - pexels

Image Source: Pexels

While the global population touched 8 billion last November, India is believed to be on track to become the world’s most populous country, given China’s growth slowdown. But if you go by the UNFPA’s State of World Population Report 2023, the country has almost achieved the landmark. The report pegs India’s estimated population at 142.86 crore people by mid-2023, marginally ahead of China at 142.57 crore.

Further, the report indicates that 68% of India’s overall population falls between the age group of 15 to 64 years, which is the working population age. In terms of age distribution, 25% fall under the age group of 0-14 years, 18% between 10-19 years, 26% between 10-24 years, and 7% are aged 65 years and above.

In July last year, the World Population Prospects 2022 report by the UN projected that India’s population would reach 166.8 crore by 2050, surpassing China’s population, which is expected to decline to 131.7 crore. In 1950, India had a population of 86.1 crore, while China had 114.4 crore. Last year, China had an estimated population of 144.8 crore, making it the most populous country in the world, while India had an estimated population of 140.6 crore.

The average life expectancy at birth for males in India is 71 years, according to the report, while for females it is 74 years. India’s total fertility rate (births per woman in the reproductive age) is estimated at 2.

It is worth noting that this estimate is based on incomplete information as there has been no census in India since 2011. Patrick Gerland, the UN’s Chief of Population Estimates and Projection, stated in an interview with the BBC, that any numbers regarding India’s actual population size are “naive assumptions based on fragmental information.”

“As the world reaches 8 billion people, we at UNFPA see India’s 1.4 billion people as 1.4 billion opportunities,” said Andrea Wojnar, the representative for United Nations Population Fund (UNFPA) India and the country director for Bhutan. She added, “As the country with the largest youth cohort, its 254 million youth (15-24 years) can be a source of innovation, new thinking and lasting solutions. The trajectory can leapfrog forward if women and girls, in particular, are equipped with equal educational and skill-building opportunities, access to technology and digital innovations, and most importantly with information and power to fully exercise their reproductive rights and choices.”

India’s population is forecast to grow to 1.67 billion in 2050 before settling at 1.53 billion in 2100, with a peak at 1.7 billion sometime in 2064, according to UN estimates.

Where the world stands?

• The global population is projected to reach 8.045 billion by mid-2023.

• Africa is expected to experience a significant increase in its population from 1.4 to 3.9 billion inhabitants by 2100.

• Japan has seen a decrease in the number of its citizens, due to its aging population, losing over three million inhabitants between 2011 and 2021.

• China’s population declined for the first time since 1960 in 2020, as a result of Beijing’s decision to end its one-child policy in 2016 and allow couples to have up to three children in 2021.

• Eight countries with populations of over 10 million, mostly in Europe, experienced a decline in population over the last decade.

• World’s population would reach a peak of 10.4 billion in the 2090s before declining.

Source: UN data; Euronews

Difficulties on the horizon

India’s population growth has been considered a positive factor driving its economy (especially post-liberalisation), but it will come at the cost of a burden on resources and employment. Around 68% of India’s population falls in the age group of 15-65 years, meaning that the country is backed by a young population. The country’s working-age population is expected to grow to around 18.6% of the global workforce by 2027, while China’s is projected to decline to 18.3%.

Half of India’s population is under the age of 30, and around 12 million people enter the employment market every year. Data from the Centre for Monitoring Indian Economy (CMIE) shows that India’s unemployment rate increased to 7.8% in March. The challenge for India is to sustain that pace of expansion in the coming decades or end up with even higher unemployment rates. For this, the country needs to implement policies on education, health, skill learning and other contributing sectors. And to come up with more jobs.

In addition to this, India’s population is mostly rural, unlike China. While many people from both countries move to large cities for better opportunities, the majority of India’s population will continue to live in rural areas. In contrast, by 2035, most of China’s population is expected to reside in urban areas, according to UN-Habitat estimates.

India’s demographic dividend, which is its large working-age population, has offered valuable economic opportunities and labour cost advantage in comparison to developed countries that are experiencing an ageing workforce.

While India’s workforce numbers are lower than those in West Asia and Africa, they are still significant in powering business process outsourcing projects from developed countries such as Europe and the United States. Despite overtaking China, India’s population growth is slowing. India’s Total Fertility Rate (TFR) has also declined from 2.2 to 2.0 as per the fifth round of the National Family Health Survey (NFHS-5).

Another key advantage of India’s population is the attraction of its consumer market, especially the middle class which is the focus of several companies. However, the middle-class promise is very different in comparison to how it is conventionally understood by developed markets.

A research by PRICE (People Research on India’s Consumer Economy) estimated the size of the middle class at 31% of the population or nearly 1 in 3 Indians. This presumes an annual household income of Rs 5-30 lakh. However, based on 2015 data, an analysis in Mint used the US as a benchmark and adjusted for PPP estimating the middle-class income cutoff at US$ 13,700. At this cutoff, the size of the middle class comes out as just 3% of the population or 24 million.

Final Word

Opinions regarding the growing population appear to be weighing more on ‘seeing it as an advantage’ rather than a problem. But, it is important that the situation must be examined in light of recent developments.

While India’s large and growing workforce is a potential draw for international investors, the challenge of meeting the demand for jobs from millions of new workers entering the market each year remains a significant one for the Indian government.

This is all the more relevant when the current job market is expected to witness a major upheaval with the rise of Industry 4.0 technologies. A recent report by TeamLease Services Group, for instance, estimates that India will need around 30 million digitally skilled professionals by 2026, and around 50% of the workforce will have to reskill itself.

The nation needs to create better and more job opportunities, improve supporting sectors and come up with formulas that can achieve more than incremental gains. At the same time, it must proactively tap opportunities to supply quality manpower to countries that face a deficit, especially in the services sectors.

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