Ajit Ranade: Demography is destiny: A law that cannot be challenged

From 11.7% in 2013, it hit 19.1% in 2023 and is expected to reach 24.1 % in 2030. In Singapore, the pendulum of population policy has swung from one extreme to the other. In 1966, a Family Planning and Population Board was set up to encourage birth control.

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There was a ‘Stop-at-Two" programme, with disincentives for families having more than two children. Sterilization was rewarded. By the early 1980s, the government became pro-natalist, launching a ‘Have-three-or-more’ campaign in 1987. Its population control policies had been too successful and needed reversing.

But despite baby-bonus schemes and cash incentives, the fertility rate keeps falling. Hence, immigration policy is being relaxed. Roughly 40% of Singaporeans are immigrants and 39% are non-citizens. The current policy seems to aim simply to stabilize the population rather than raise or lower the TFR.

Just like Singapore, almost all major countries have tried social engineering and population control. As per the United Nations 2021 World Population Policies report, nearly two-thirds of all countries had policies on fertility: 69 governments to reduce, 55 countries to increase and 19 to maintain it. Half the countries trying to reduce TFR are developing, implying that they think that high TFR hurts economic development.

India too has traditionally subscribed to that Malthusian view. In 2022, a private member’s bill was introduced in Parliament, proposing incentives for limiting children in a family to two. More than six states have the two-child norm as mandatory for panchayat members.

Policies to limit family size are being pursued in India even as nearly half of all states have reached a TFR of 2.1 or below. That is the ‘replacement rate’ that leads to a stable population. It is a little over two progeny from two parents to account for factors like mortality, infertility and often also a gender ratio in favour of males.

In a sign of a reversal, Andhra Pradesh has scrapped a 30-year-old law barring those with three or more children from contesting local elections. It has a TFR of 1.6 and is worried about an ageing society. Many other southern states will follow suit in relaxing the norm.

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Echoing this sentiment, RSS chief Mohan Bhagwat recently said that India should aim for a TFR of 3. With a lower TFR, “a society can gradually fade away on its own," he said. That may be too alarmist, but clearly the sentiment in India is shifting to tackling a low TFR, not high fertility.

The actual relationship between population and economic growth has not been settled. Does high population growth cause growth to slow down or the reverse? As per the research of Angus Maddison, continued as the Maddison Project after his death in 2010, there is strong evidence that the long-term link between population and economic growth was stable for about 1,000 years before the industrial revolution.

For instance, in England from 1,000 CE to 1820 CE, the average annual population growth rate was 0.29% and annual per capita income growth was 0.12%, so that overall economic growth (the sum of the two) was 0.41%. But in past two centuries, this relationship has broken.

Per capita GDP in England has risen 11-fold since 1820. Between 1820 and 2010, the average population growth was 0.57%, whereas per capita income was rising at 1.28%. During this phase, agricultural output outpaced population, disproving the gloomy food scarcity forecast of Malthus.

Technological innovation seemed to be winning the race against resource scarcity. But Malthus followers have not given up. Paul Ehrlich, a contemporary Malthusian, and Julian Simon had a famous bet on commodity prices in 1980, in which the latter said that “brains would solve the mineral scarcity problem." Simon won the bet, as by 1990, the world’s population had risen by nearly one billion but commodity prices had fallen.

Such techno optimism still drives policymakers who argue that human capital is the ultimate resource critical for economic growth. Population growth, which parallels growth in productivity, wages and family incomes, is required. India’s predicament is that despite being one of the fastest growing economies, its per capita income at around $3,000 is the lowest in the G20.

In the early 1990s, the economies of India and China were of comparable size and shared a similar rank by per capita income. Three decades later, China’s economy is six times bigger, and its per capita GDP rank is 70 compared to India’s 141. Growth in China has been more inclusive than India’s.

Demographic changes are driven by multiple factors. Declining mortality and rising fertility both lead to population growth, but have opposite effects on economic growth. Rising family incomes tend to increase the opportunity cost of raising children, leading to a lower TFR. There is a high correlation between female education and incomes on one hand and family size on the other.

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Controlling TFR is doomed to fail. We need policies that raise per capita income, enhance human capital and encourage technological innovation; and state policies that are immigrant friendly and compensate for inter-state TFR differentials.