Dr. Pabitra Kumar Jena & Vimarsh Padha
Astounding as this may sound, it is a rationally unswerving idea of what population profile of India will appear like twenty years from now – in sharp contradistinction to economic or political prognostications about what lies in store twenty years hence. This is because the vast majority of the people inhabiting India in 2030 are already alive and living here today. With about 1.295 billion people, India is the world’s second most populous country and the largest democracy. Despite two decades of remarkably rapid economic growth, material poverty is still widespread in India – the (World Bank estimates), that well over 23.6 percent of Indian population still lives on less than $1.25(USD) a day. Even so, life expectancy at birth is now estimated to exceed 66.21 years, the United States’ level right after World War II and is on track to continue its rise, barring only some presently unimaginable catastrophe. Being in the third phase of demographic transition, while the birth rates have fallen very sharply over the past two generations, nationwide levels remain well above replacement at about 2.1 births per woman per lifetime. Since international migration trends do not impact India’s population profile much, the country’s fertility and mortality prospects will essentially shape its future demographic contours.
A decade from now, India will still be a rather youthful country, with 8-9 percent of its population 65 years of age or older and a median age of 31-32 years (compared to roughly 13 percent and 36.8 years respectively, for the United States today). About 70 percent of India 2030’s population will comprise men and women of working age (conventionally defined as the 15-64 group), compared with 65 percent today. This means that the working-age manpower is set to grow more rapidly than overall population in the decades immediately ahead, by about 1.3 percent per annum on average. By 2030, UNPD anticipates India’s life expectancy to reach 70 years, and by its projections, the India of 2030 will be about 40 percent urban, up from an estimated 30 percent today.
Compared with other major states in the Asia-Pacific region, especially China, which is still the most populated country in the world, it is clearly the obvious comparator to India, with a current population of over 1.3 billion. No other county is even close in scale to these two. China’s working-age population is on track to peak around 2015 and will have been shrinking for a decade and a half by 2030. By contrast, India’s steadily growing working-age population will be the world’s largest well before 2030. Recently on 29th October 2015, the government dropped the policy. As far as economic prospects are concerned, with a growing median age population and low replacement levels along with dropping fertility levels, the economy of China is advocating a shift from a global manufacturing based hub endowed with abundant labor force towards a population comprising of increased dependency ratio. As a result, the economy will be shifting from a manufacturing to a services oriented economy. Thus far, India’s prospective population profile may sound more favorable than China’s, at least regarding implications for economic development. Perhaps most importantly, China has a dramatic edge over India on mass educational attainment. As of today, almost everyone in China’s working-age population is, at least, literate. By contrast, roughly a third of India’s working-age manpower has never been to school. India is about half a century behind China in eliminating illiteracy. Even posting steady educational progress, India will still lag far behind China in attainment levels twenty years from now. If we see India’s current and projected demographics about how the country might fare on the international stage going forward, economically, from a strategic standpoint, two aspects of a country’s demographics are especially relevant to economic potential: (1) the pool of trained or highly trained, working-age manpower, and (2) the scientific-technological capacities of the highly educated cadre within the workforce. The ongoing shift in the balance between India and China is remarkable. As recently as 1990, India was estimated to have fewer relatively well-educated men and women of working age than the United States and barely a third as many as China. Today it is estimated to have over half as many as China, on course to outstrip China by 2040. Measuring scientific-technological capabilities is a complex proposition. One useful aperture on “knowledge production” is the number of international patents a country earns in relation to its manpower with higher education and its income level. Whether China can emerge as an indigenous center of knowledge production is a huge question for the future of Asia, and the world. India, on the other hand, looks to be already on course to accomplish this.
One must remember that India is something of an arithmetic average, given its tremendous regional disparities. This includes serious disparities in education. Where birth rates are high, school enrollment tends to be low and educational attainment for girls is typically lowest. Despite other positive demographic prospects for India’s development, an “educational deficit” has serious and adverse implications for health, well-being, social stability, economic growth, and even international security in the decades ahead. There are encouraging signs, however, as the government is moving to expand educational coverage. But until “education for all” is a reality rather than a slogan, India’s rise will be slowed by the shortage of educational opportunities. With second large labor force available that is about to rank no.1 within a decade, there is a potential but with a variety of challenges ahead. Demographics that is often used as a core of long-term investment, in the case of India it creates a great opportunity for economic growth and investment returns. Whether that opportunity is realized would depend on the kind of policy framework that has to be placed up-front and so far that doesn’t exist. If the status continues, it can cause enormous problems because of the magnitude of the jobs that need to be created. As per ‘Espirit Santos Securities’ CEO, 250 million jobs will be needed in next two decades, i.e., equivalent to Brazil’s entire workforce over a decade. The conventional model of development has been absorbing workforce through shifting from agriculture to service oriented.
Ensuring better management of population and improvement in formal education are essential to foster for the idea of sustainable development of environment. Socio-economic disparities can also be reduced by pursuing for optimum population. Cross-state variation in demographic and economic indicators could be usefully exploited to estimate, for each state, the size of the demographic dividend (if any) to date. Demographic projections could shed some light on the potential size of the dividend in the coming decades. Most analysis to date has treated dependents (those under 15 and older than 64) as a single group. Treating these groups separately may clarify whether the demographic dividend in particular circumstances is driven by low numbers of one or the other. More broadly, it would be useful to analyze the effect of labor force participation rates, as distinct from working-age share.
To better establish causality, it would be useful to develop and implement better treatment of the endogeneity of population variables. For example, it might be possible to examine the economic impact of changes in age structure that result from unanticipated and exogenous shifts in immigration policy or infectious disease mortality. Because the demographic dividend does not arise automatically, it would be useful to carefully test the interaction of demographic change with policies, especially in the areas of governance, trade, labor market conditions, and capital markets. The relative contributions of men’s and women’s output to economic growth are insufficiently understood. In light of the prospect of increased female participation in the labor force, research might contribute to further understanding of policies that can promote realization of the demographic dividend. Last but not the least, the census processes have to be further diversified for taking those aspects into consideration that lack any such conclusion lacking in proving useful for the policy analysis.
Demographic change in India is opening up new economic opportunities. As in many countries, declining infant and child mortality helped to spark lower fertility, effectively resulting in a temporary baby boom. As this cohort moves into working ages, India finds itself with a potentially higher share of workers as compared with dependents. If working-age people can be productively employed, India’s economic growth stands to accelerate. Demographics matter to the pace and process of economic growth and development. In reality, there are very few factors that are more important and reliable than demography worldwide. As mentioned, huge population size is having some opportunities towards economic development of the country. It is also observed India’s changing demographics are creating a strong impulse for economic growth. But there are certain threats which are very much alarming in the world and more specifically in India. However, with the proper addressing of the problem of the prevailing demographic trend by the policymakers may solve the problem and India can reap the benefit of demographic dividend. Policy choices can potentiate India’s realization of economic benefits stemming from demographic change. Failure to take advantage of the opportunities inherent in demographic change can lead to economic stagnation.
(The assistant Professor & M. Sc. (Economics) Student, Department of Economics, Shri Mata Vaishno Devi University, Katra, Jammu & Kashmir.)
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