Create Economic Opportunities to Reap India's Demographic Dividend

Table of Contents

Context: The article discusses India becoming the most populous country in the world, overtaking China in population according to the United Nations Population Fund (UNFPA)’s ‘State of World Population (SOWP) report 2023’.

Create Economic Opportunities to Reap India’s Demographic Dividend Background

Population Dynamics in India: From Explosion to Decline and Improvements in Mortality Indicators:
- India’s demographic structure has witnessed significant changes since its Independence.
- The country has gone through a population explosion in the past, but has also witnessed a decline in total fertility rate (TFR) over time.
- While there have been improvements in various mortality indicators, certain challenges still exist in fully leveraging the demographic dividend to improve living standards, provide skill and training, and generate employment.
Population Growth:
- India’s population currently accounts for 17.5% of the world’s population.
- According to the UN World Population Prospects (WPP) 2022, India is expected to become the most populous country in the world by 2023, with a population of 140 crore, surpassing China.
  - This marks a four-fold increase in population since Independence when India had a population of 34 crore.
  - The country is projected to reach 150 crore by 2030 and 166 crore by 2050.
- As per UNFPA’s ‘State of World Population (SOWP) report 2023’,
  - India now has 1,428.6 million people and is the most populous country in the world, outstripping China’s population.
  - As much as 68% of India’s population belongs to the 15-64 years category, and 26% in the 10-24 years group, making India one of the youngest countries in the world.
Decline in TFR:
- India’s TFR has declined significantly, with the rate slipping below the replacement level fertility of 2.1 children per woman in 2021.
- In the 1950s, India had a TFR of six, but several states have now reached a TFR of two, except for Bihar, UP, Jharkhand, Manipur, and Meghalaya.
- The National Family Health 5 Survey (2019-21) found that India attained a Total Fertility Rate of 2.0 for the first time, less than the replacement level of 2.1, falling from 2.2 in NFHS 4 (2015-16).

Improvements in Mortality Indicators: Despite the challenges, there have been improvements in various mortality indicators in India.
- Life Expectancy: Life expectancy at birth has seen a remarkable increase from 32 years in 1947 to 71 years in 2023, while it is marginally lower for women at 74 years.
- Infant Mortality Rate: The infant mortality rate has also declined significantly, from 133 in 1951 to 27 in 2020. The current infant mortality rate for India in 2023 is 26.619 deaths per 1000 live births, a 3.89% decline from 2022.
- Under-five Mortality Rate: The under-five mortality rate has fallen from 250 to 35.
- Maternal mortality rate: Additionally, the maternal mortality ratio has dropped from 2,000 in the 1940s to 103 in 2023.
Demographic Dividend:
- With 68% of its population as youth, and working population, India could have one of the largest workforces in the world, giving it a global advantage.
- And, India has a window of opportunity well into the 2040s for reaping its “demographic dividend”.

Understanding India’s Demographic Dividend and its Evolution Over Time

Demographic Dividend:
- It refers to the economic growth potential that can result from changes in a population’s age structure, particularly when there is a larger share of the working-age population (between 15 to 64 years) compared to the non-working age population (below 14 years and above 65 years).
Evolution of India’s Demographic Dividend:
- In the 1950s, India had a high birth rate, high infant mortality rate, and a low life expectancy.
- However, with improvements in healthcare, education, and family planning programs, India’s population growth rate started to decline in the 1980s.
- This decline in population growth rate, combined with improvements in the quality of life and an increase in the number of people entering the workforce, led to the current demographic dividend that India is experiencing.
Current Demographic Dividend of India:
- India is currently experiencing a demographic dividend as it has a large proportion of young people in its population.
- According to the United Nations Population Fund (UNFPA), India’s median age is 28 years, which is significantly lower than the median age of 38 in China and the United States, 43 in Western Europe, and 48 in Japan.
- This suggests that India has a higher proportion of people in the working-age group who can potentially contribute to economic growth.
State-level Variation in Demographic Dividend:
- Southern states, which are more advanced in demographic transition, have a higher percentage of older people compared to the northern states.
- For instance, Kerala’s population is already ageing, while Bihar is predicted to continue to have a growing working-age cohort until 2051.
Advantages of India’s Demographic Dividend:
- Fiscal Space: India’s demographic dividend provides an opportunity to divert fiscal resources from spending on children to investing in modern physical and human infrastructure, thereby increasing the economic sustainability of the country.
- Increase in Workforce: With more than 65% of the population in the working-age group, India has the potential to emerge as an economic superpower, supplying more than half of Asia’s potential workforce in the coming decades. The increase in the labour force would enhance the productivity of the economy.
- Rise in Women’s Workforce: As fertility rates decline, it is expected that more women will enter the workforce, which can be a new source of growth for the country.
Challenges Associated with India’s Demographic Dividend:
- Unfulfilled Educational Requirements: Despite over 95% of children attending primary school in India, poor infrastructure, malnutrition, and a lack of trained teachers have resulted in poor learning outcomes. Additionally, gender inequality in education is a concern, with boys more likely to be enrolled in secondary and tertiary school than girls.
- Low Human Development Parameters: India ranks 131st in the UNDP Human Development Index 2020, indicating a need for substantial improvements in health and education parameters to make the workforce efficient and skilled.
- Jobless Growth: There is a growing concern that future growth could be jobless due to de-industrialization, de-globalization, and the industrial revolution 4.0. The informal nature of the Indian economy is also a hurdle in reaping the benefits of demographic transition, with around half of the working-age population being unemployed.
Policy Paralysis: Without proper policies, the increase in the working-age population may lead to rising unemployment, fuelling economic and social risks.
Rise in the Share of Elderly Population: A greater proportion of youth at present will result in a greater proportion of elderly in the population in the future. This will create a demand for better healthcare facilities and development of welfare schemes/programs for elderly people. As people in informal employment do not have social security, it will add to the burden of the respective state.

Decoding the Editorial

The article discusses the UN’s ‘State of World Population Report’ that has observed the following:

India’s growing Population size:
- India will become the most populous country in mid-2023, surpassing China by approximately 3 million people taking into consideration the country’s trends in birth, mortality, and international migration.
- India has had a fluctuating relationship with its population size, with the growing population being blamed for poverty and the state’s inability to improve living standards in the socialist era.
- This led to controversial sterilization programs that violated people’s dignity and freedom.
India’s Demographic Dividend:
- India’s large working-age population – the demographic dividend, has been viewed as an advantage in the era of globalization and the opening up of the economy in the 1990s.
- It observed that the Indian workers provide skilled and unskilled labour for businesses in West Asia and Africa, as well as outsourcing projects for developed countries like the US and Europe.
- Additionally, Indian students are increasingly enrolling in universities abroad.
TFR Dropping below the replacement level:
- India’s population growth is slowing, with the total fertility rate dropping below the replacement level of 2.1 for the first time, and projections show that the population will reach a peak of 1.7 billion in 2064 before settling at 1.53 billion in 2100.
- Population increase is also attributed to new developments such as the climate crisis and increasing numbers of permanent immigrants.
Enhancing Economic Opportunities: The article argues that economic opportunity, rather than national pride, will shape the aspirations of India’s working population, and that a naturally decelerating population may have limited advantages if economic opportunity is not present.

Beyond the Editorial

India’s population control measures since Independence

First Five-year plan: In 1951, India became the first among the developing countries to come up with a state-sponsored family planning program. It emphasised the use of natural devices for family planning.
Second Five-Year Plan: The number of family planning clinics has increased significantly. But since these clinics were largely set up in urban areas, they did not provide adequate results.
Third Five-Year Plan: The technique of copper- T was adopted. An independent department called the Family Planning Department was set up.
Fourth Five-Year Plan: All kinds of birth control methods (conventional and modern) were encouraged.
Fifth Five-Year Plan: National Population Policy was announced in 1976. Some important measures under this policy include:
- Increasing the minimum legal age of marriage for girls and boys to 18 and 21 respectively.
- Improving the literacy levels of females
- Popularise family welfare programmes by using all forms of media
- Forced sterilization was permitted, which was later on given up.
Sixth, Seventh, and Eighth Plans: Efforts were made to control the population by determining long-term demographic aims.
Ninth Five-Year Plan: In 1993, the government had established an expert group under the chairmanship of M.S. Swaminathan for formulating national population policy.
- In 1997, the family planning programme was renamed the ‘family welfare programme’.
National Population Policy (NPP) 2000 was announced on the tenets of free will, informed consent, and achieving a level of fertility equivalent to replacement.
More substantive poverty reduction schemes and economic reforms have raised labour productivity and employment opportunities, allowed families to empower women and reduced fertility rates as rational choices.