Opinion | The country’s population can be an asset: it is not a liability | Mint
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Business News/ Opinion / Columns/  Opinion | The country’s population can be an asset: it is not a liability

Opinion | The country’s population can be an asset: it is not a liability

Our focus should be on providing education and healthcare to mobilize a large workforce that could drive economic growth

Pradeep Gaur/MintPremium
Pradeep Gaur/Mint

In his address to the nation from the ramparts of the Red Fort on Independence Day last month, Prime Minister Narendra Modi said that rapid population growth—described as a “population explosion"—posed a formidable challenge to our future. In his view, responsible citizens with small families, who contribute to their own welfare and to the good of the nation, should be seen as role models. And parents should think about their capacity to provide for education and healthcare before extending their families. Small families, the exhortation made clear, are in national interest. He suggested that governments, at the Centre and in states, should bring supportive schemes.

This world-view is reminiscent of a belief system that dominated thinking 50 years ago. Family planning was the buzzword. Governments provided proactive support. The Emergency culminated in the compulsory sterilization programme, which led to widespread resistance and resentment among people. The problem was that such thinking did not recognize the economic or demographic factors underlying rapid population growth. Since then, the thinking has changed. So have India, and the world. Hence, it is important to understand the population issue in a new context.

The traditional belief that India will remain poor because its population is growing too rapidly is based on a simple logic of arithmetic. The larger the population, as a denominator, the smaller is the per capita availability of everything. In other words, the economy would have to run to standstill. This reasoning does not recognize that India’s population might be growing too rapidly because it is poor. For the poor, children are a source of supplementing family income when parents are young, and of financial support in old age. High infant mortality rates only strengthen the motivation for more children.

Population growth rates are always high in the early stages of development because of demographic factors. As death rates drop because of improvements in public health systems that eliminate epidemic diseases, birth rates do not because poverty and illiteracy persist. But as income levels rise, poverty is reduced and literacy (particularly among women) spreads, birth rates also come down. The bulge in population growth rates slowly diminishes. As development leads to higher income levels, birth rates decline further to levels that merely replace the existing population. Such demographic transitions are integral to development processes. At later stages, in rich countries, birth rates might drop further so that their population declines.

The demographic transition in India has been much slower than elsewhere in Asia, essentially because poverty and illiteracy persist, while the public provision of education and healthcare has been grossly inadequate. Even so, the average annual rate of population growth, which was 2.1% in 1951-1971 and 2.2% in 1971-1991, dropped to 1.8% in 1991-2011 and 1.3% in 2011-2016. Birth rates (per 1,000 population) dropped from 37 in 1971 and 29 in 1991 to 22 in 2011 and 19 in 2016, while fertility rates (births per woman) dropped from 5.2 and 3.6 to 2.4 and 2.3, respectively.

Projections in the Economic Survey 2019 suggest that average annual population growth in India will slow progressively to 1.1% during 2011-2021, 0.7% in 2021-2031 and 0.5% in 2031-2041. The fertility rate will drop to 1.8 in 2021 and 1.7 in 2031. It is worth noting that the natural replacement level fertility rate is 2.1, which means that an Indian woman would have to give birth on an average to 2.1 children for the population size to remain constant. In India, given the sex ratio, with more men than women compared to the natural level, the replacement rate would need to be higher.

This future scenario is reason for hope rather than despair. India’s population will continue to grow (at progressively slower rates), because of the relatively high proportion of young people in our population. Of course, our population will begin to age significantly in about a decade. The silver lining is that the number of working-age people (20-59 years) and their share in total population will continue to increase for more than two decades and peak at 59% in 2041.

For low-income countries, where a significant proportion of the population is underemployed, a large population that is expected to increase further is a potential asset rather than a liability, if people, their most abundant yet underutilized resource, can be mobilized for development. The potential is even greater in India. The high proportion of young people in the population will mean an increase in our workforce, more so, if a higher proportion of women enter the workforce. It will also mean an increase in savings rates for some time, as young people save while the old do not. This source of economic growth will not be available to many Asian countries for long, as their workforce contracts, so that they would have to rely on productivity increases to sustain growth. However, we can harness this demographic dividend only through education that creates capabilities among our people.

We should not worry that a population explosion will lead to an uneducated and unhealthy society because the causation runs in the opposite direction. Instead, we should focus on providing education and healthcare. This would make our large population a source of rapid economic growth, which could bring about a profound change in the well-being of people. Our economy could be transformed in the next 25 years.

Deepak Nayyar is emeritus professor of economics, Jawaharlal Nehru University

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Published: 13 Sep 2019, 12:14 AM IST
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