There is a need for the Centre and states to begin drafting a holistic national/regional policy for addressing the issues and concerns of India’s growing population and the various social, economic and political factors at play.
Governance standards vary widely across states.
Ramasundaram, IAS (Retd)
At the time of independence, India’s population was 350 million. Today, it has quadrupled to 1.4 billion. This increase is not due to having more children; in fact, the average number of children per family has more than halved. It used to be around six children per family, but that number has now dropped to three. In the southern states, the average has decreased from four to two. So why is the population still growing? This is due to a demographic transition.
In pre-modern societies, both birth and death rates were very high. As health facilities and nutrition improve, death rates fall rapidly, but birth rates take a bit longer to decrease. This is more of a social phenomenon than just a health one. During this period of transition, the population grows. No country is an exception to this. Western countries went through this transition about 100 years ago, and India is going through it now. Within India, states like Kerala and Tamil Nadu have almost reached the final stage of very little growth, while states like Uttar Pradesh (UP) and Bihar are still in transition. This is why the population continues to grow. The good news is that death rates are falling everywhere.
Glaring Disparity
However, there is a concerning issue: economic disparity between states. According to government data, the per capita income of the five southern states is about four times that of UP, Bihar, and Jharkhand. These northern states also have lower levels of development. Many factors contribute to this disparity, but better governance and higher literacy rates in the south are key reasons.
My wife, who is from UP, often says in a lighter vein, “You people have had a peaceful history. We were invaded many times and constantly fighting. We didn’t have the time to practice Bharatanatyam or Carnatic music like you did in Tamil Nadu.” However, since independence, we can’t blame outsiders for the lack of development—it is due to our own administration and elected governments. Governance standards vary widely across states.
Not Religion, but Region Matters
How is the government going to address this disparity? Frankly, there are no easy answers. I am simply presenting the facts. Some believe that Muslims are having more children and will eventually outnumber Hindus. This is not true. Even the Muslim fertility rate is declining, though it remains slightly higher than that of Hindus. Other communities, such as Sikhs and Jains, have even lower fertility rates than Hindus, although their populations are smaller.
The percentage of Hindus in the population has decreased by about 5%, while the percentage of Muslims has increased by about 7%. However, the average Hindu family in UP, Bihar, or Jharkhand has more children than the average Muslim family in the south. In these northern states, the average is around three children per family, while in the south, it is closer to two. Rather than religion, it is the region where you live that seems to determine family size, life expectancy, and professional outlook.
What an Irony!
A state like Bihar is about 80% rural, while the southern states are roughly 45% rural and 55% urban. In predominantly rural areas, most people work in agriculture, and many men migrate to other states for construction work. I remember when I was overseeing the construction of the Assembly Building in Tamil Nadu, 100% of the labour came from Hindi-speaking states. I told the then Chief Minister, Mr. Karunanidhi, that his dream building had been constructed not by Tamils, but by Hindi-speaking workers.
The next day, we hosted a bada khana (feast) in a pandal for the workers. The CM addressed the workers in Tamil and perhaps for the first time, there was no applause for his speech. However, when an IAS officer translated his speech into Hindi, there was plenty of clapping. The CM remarked, “What an irony!” But it was true.
So what is the solution? The answer is clear: these states need to prioritise education and create employment opportunities, which ultimately depend on good governance. In Tamil Nadu, we have had various types of governments, but we have never deviated from the overall direction of development. This is a credit to the political parties here.
We need to grow at an annual rate of 8% to 8.5%
Dr. M. Suresh Babu
Director
Madras Institute of Development Studies (MIDS)
Broadly, demographic transition consists of phases. In phase one, both birth rates and death rates are very high. In phase two, death rates begin to fall due to improvements in healthcare and living conditions, but birth rates remain high and do not decrease as quickly. In phase three, both birth rates and death rates decline. Phases four and five depend on the steepness of the birth rate decline, with some variations in how sharply birth rates drop compared to death rates.
Structural Transformation
In addition to demographic transition, there is also a phenomenon called structural transformation in an economy. Economies typically start with an agrarian structure, where agriculture is the dominant sector. As the economy develops, it moves into a phase of industrialisation. In the third phase of economic development, the service sector becomes the largest contributor to the economy. This shift from an agrarian to a service-oriented economic structure is the process of structural transformation.
During this transformation, the percentage share of each sector in GDP changes. Initially, agriculture contributes the most to GDP, but as the economy evolves, services become the dominant sector. Along with these changes in GDP contribution, there are also shifts in employment distribution. At first, a large portion of the population works in agriculture. Over time, more people move into industrial jobs, and eventually, the majority work in the service sector.
Migration Transition
Third, there is the concept of migration transition. Initially, unskilled labourers tend to migrate in search of better opportunities. This migration is often male-dominated, with men relocating for work while their families stay behind. In some cases, the entire family may migrate together, but more commonly, the male migrates alone and may start a new family in the new location, while the family left behind remains in an unskilled labour context.
The second phase of migration is semi-skilled migration, which, like the first phase, is predominantly male. However, in this phase, the family usually remains in the home location, and the migrant sends money back. Remittances contribute to the home economy rather than the host economy, where the migrant works. The third phase of migration involves highly skilled individuals who often migrate with their families and prefer not to return. In this case, the home economy does not benefit from remittances, which is a significant loss.
Vision 2047
As we look ahead to 2047, marking 100 years of independence, we have a vision for “Viksit Bharat”—achieving the status of a developed economy. Currently, the benchmark for a developed economy is a per capita income of $12,500. India’s per capita income is currently $2,400. To reach this goal in the next 23 years, we need to grow at an annual rate of 8% to 8.5% and also use the power of compounding. India has only achieved such growth rates during the period from 2003 to 2007, just before the global financial crisis, when we reached a 9% growth rate and, in one year, even touched 9.5%. This led to dreams of double-digit growth and overtaking China.
Perhaps the only time in global history when economies sustained such high growth rates for nearly a quarter of a century was during the “Asian Miracle,” which saw rapid development in Southeast Asian countries like South Korea, Thailand, Hong Kong, and Singapore.
Invest in Children
To summarise, we are currently experiencing demographic transition, economic structural change, and migration transition. I’m not suggesting that the demographic dividend is inherently good or bad, but we must invest in our children and youth to reap long-term returns. As fertility declines and families have fewer children, they can invest more in each child—better schools, English education, advanced technology, and higher education.
However, as time passes, the share of the older population will rise, and the demographic dividend will gradually disappear. There is only a limited window of demographic opportunity, and if we want to benefit from it, we must act now. Other economies have missed this opportunity, but we have it now, and we must seize it while we can.
To achieve this, we need forward-looking policies and a focus on health. COVID-19 was a major lesson for all of us. We must provide young people with the right opportunities to express themselves and fully realise their potential. The median age in India is currently 26, which is not bad. It was 28 earlier, and it is projected to reach 36. As the median age rises, productivity tends to decline, and we could become an ageing society, which has its own consequences.
One major challenge is the lack of comprehensive employment data. Various agencies collect employment data, but it’s fragmented. Although the youth population is large, youth unemployment—especially among those aged 20 to 24—is also high. Many are neither in education, employment, nor training. They are simply languishing, and this is a problem we must address.
Quality and Quantity of Jobs
In our society, we have regular wage workers, casual labourers, and the self-employed. For example, as a regular wage worker, I receive a salary, leave travel concessions (LTC), and other social security benefits. Casual labourers and the self-employed do not have access to these benefits. We must closely examine the quality of jobs being generated in the economy. If youth are stuck in precarious jobs, it can lead to discontent, as we have seen in countries like Sri Lanka and Bangladesh.
There is also a significant gender disparity in labour force participation. No country has achieved sustained GDP and per capita income growth without increasing women’s participation in the workforce. The gender gap in India is still large. If we get our policies right now, we can still reap the demographic dividend—we haven’t missed the bus yet. So, what do we need to do?
- Look East: We must look to countries like Singapore, Taiwan, and South Korea, which have successfully leveraged their demographic dividends through proactive policies that accelerated growth.
- Invest in Children: Currently, a child in India consumes around 60% of what an adult aged 20 to 64 consumes, compared to 85% in China. We need to spend more on children’s nutrition and education. Poor nutrition hampers their ability to learn, and the first 1,000 days of a child’s life are crucial.
- Focus on Education and Health: These areas are fundamental to long-term development.
- Improve Reproductive Healthcare: Reproductive health services must be accessible and rights-based.
- Promote Gender Equality: We must increase female workforce participation and create incentives for women to enter the workforce.
- Ensure Equitable Growth: India’s vast diversity requires policies that promote equitable growth across all regions.
- Strengthen State-Level Governance: Much of the development action happens at the state level, and the central government can only do so much. We need to improve the institutional and governance capacity of states if we want to fully realise the benefits of our demographic dividend.
Government policies and schemes need to account for the diversity of our country.
Prof. D. Mahalingam
Assistant Professor
Bharathidasan Institute of Management
We economists are often seen as fence-sitters. I won’t say that the demographic dividend is either a bane or a boon; instead, I’ll be cautiously optimistic. We’re aware of the challenges when it comes to India’s demographic dividend. I’ll touch upon a few strategies that we can look into to overcome these challenges and tap into the opportunities.
Let me share a few incidents I’ve come across. I’m closely associated with the government of Tamil Nadu, working on a few projects, including a Planning Commission project. During one of our visits to the Perambalur district, we interacted with officials from the Skill Development Department. They mentioned a labour shortage in semi-skilled areas. Particularly in ITIs (Industrial Training Institutes), the enrollment is low, while engineering colleges are full of students who struggle to find jobs after graduation.
The Mismatch
This points to a mismatch between the demand for jobs and the supply of qualified candidates. Speaking of employability, there’s a scheme by the Tamil Nadu government called Naan Mudhalvan. This initiative aims to improve the employability of graduates in Tamil Nadu. During the initial meetings with bureaucrats and corporate representatives, the government questioned why not enough jobs were being created. The response was that it’s not a lack of jobs, but a mismatch between the skills provided by the education system and the skills demanded by the job market. For instance, AI and ML have many openings, but our education system, whether in schools or colleges, doesn’t equip students with the skills to fill these roles.
We focus too much on STEM—Science, Technology, Engineering, and Mathematics—while neglecting areas like Arts and Social Sciences, which also have tremendous opportunities. I come from an agricultural background, having studied both math and biology in my undergraduate degree. When I switched to economics, there was criticism from my family and friends, who questioned why I was moving into the arts. But the reality is that there’s a lot of potential in those fields as well.
Learning Never Stops
Education quality is one area that we must focus on. There is no one-size-fits-all solution. Government policies and schemes need to account for the diversity of our country. Upskilling should be gradual and continuous; learning never stops, even after joining an organisation. We need to instill this culture of continuous learning, especially in Gen Z, who often seek instant gratification. We also need to acknowledge that the government cannot do everything alone. There are financial constraints, so society as a whole must take responsibility. This is a collective effort.
Finally, we must focus on innovation. Many Gen Z individuals no longer want to be employees; they want to start their own businesses. The government has introduced numerous schemes to support startups, but there is still room for improvement.
There are many strategies we can adopt to reap the demographic dividend. However, addressing the gaps in our education sector should be a priority. We need to promote gender equality in the workforce. While there is debate about recognising care work, we must ensure equal participation from women in the economy. That’s something we need to encourage and support.
