The spectre of Malthus: India fast losing its demographic potential

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Updated: September 18, 2019 7:28:58 AM

Different communities have different fertility rates; typically, immigrating groups produce more children than native—mostly white—populations in these regions. In the US, fertility rates amongst the white community average 1.7 while those among the Hispanic community average 2.2.

India, demographic potential, United States, Europe, Russia, US fertility, financial express, financial express news, fertility rate, Global population growth, population growth,  National Fertility and Health Survey, NFHS, The geopolitical repercussions of population decline in the developed world are becoming increasingly mainstage. Immigration is changing the ethnic make-up of many countries in Europe and the United States.

By TV Mohandas Pai
& Nisha Holla

The world is experiencing unprecedented demographic change, and the topic occupies centre-stage in many countries. Global population growth rate reduced from 2% in 1970 to 1.1% in 2018. On average, the population is ageing; and rather steeply, across the developed world. The fastest growth is now seen mostly in Africa due to higher fertility rates. Japan is a classic case of an ageing country, where the number of yearly births is significantly lower than the number of deaths. World Bank data shows Japan’s population growth rate deteriorated from a dismal 0.05% in 2008 to a negative 0.2% in 2018. Median age is around 47 years, and the ratio of older people to the working-age population is the world’s highest.

Fertility has dramatically reduced in developed regions like the United States, Europe, and Russia. The US fertility rate is now 1.8 births per woman, down from 3+ in 1964, and less than the replacement rate of 2.1. Population growth decreased from 0.95% in 2008 to 0.62% in 2018. Their population is ageing, with a median age of 38 years as opposed to 28 in 1970. Meanwhile, Russia’s growth rate has been hovering around 0% for over two decades. The developed world is getting older, and shrinking. The biggest challenges are now in managing an ageing society, with implications in social security benefits, hospices and healthcare, workforce productivity, automation, accelerated obsolescence, and many other factors.

The geopolitical repercussions of population decline in the developed world are becoming increasingly mainstage. Immigration is changing the ethnic make-up of many countries in Europe and the United States. Different communities have different fertility rates; typically, immigrating groups produce more children than native—mostly white—populations in these regions. In the US, fertility rates amongst the white community average 1.7 while those among the Hispanic community average 2.2. The white community is estimated to dip below 50% of the population by 2045, while the Hispanic community might reach 25%, up from 17% in 2018.
Apart from other ramifications, the question of skills among communities is foremost. Historically, the immigrant Hispanic community does not have the same skill level as the white community, which bleeds into economic productivity, and national growth. With the steep rise in non-white politicians—especially in the neo-socialist, extreme left-wing cliques in the Democratic Party exemplified by “The Squad”—demographic change is bleeding into politics as well.

Closer home, China—the world’s most populous country—is witnessing a colossal shift. The population growth rate has stabilised at around 0.5% over the last decade, and the number of babies born in 2018 was only 15.23 million—the lowest since the 1961 famine. Median age is 37 years, compared to 19 years in 1970. Like the developed world, China, too, now faces issues like a shrinking workforce, and an ageing population.

India’s fertility has dropped dramatically. Data from the National Fertility and Health Survey (NFHS) shows India’s Total Fertility Rate (TFR) decreased from 3.39 in 1990-92 (NFHS-1) to 2.18 in 2013-15 (NFHS-4). This means, already in 2015, we were below the average global replacement rate of 2.3. A previous article, by authors Pai and Baid, (bit.ly/2MtXsLY) projects that India’s TFR will fall just under 2.0 in 2019. Following the linear trend projection indicates that TFR in India might be as low as 1.86 in 2021.

“Demographics is truly a nation’s destiny. The US took 50+ years to stabilise from a fertility rate of 3+ to 1.8. China took under two decades, due to the forced enactment of the One-Child Policy. India is achieving this drop in three decades without any extreme interventions. It is remarkable that a country the size of India is achieving this organically. Policymakers must study the effect of liberalisation on our demographics; it cannot be a coincidence that fertility dropped steeply from 3.4 in 1992 to 2.18 in 2015 after liberalisation in 1991.”

To examine this trend from another angle, there is a wealth of data in the Civil Registration System (CRS). CRS maintains a state-wise database of the number of registered births and deaths in the country. The latest CRS report, based on 2017 data, marks the level of registration of births at 85%, and of deaths at 80%. With this, we can estimate the number of births and deaths per year, and the population growth, barring immigration. The accompanying graphic contains yearly net additional population since 2011, with actual data up to 2017, and trend projections for 2019 and 2021.

With the addition of annual net populations based on CRS data, the projection for 2021 comes close to 139 crore, as shown in the accompanying graphic. The data-backed model also predicts that decadal growth, and growth rates for 2011-21 will fall more steeply than in the previous decades. The upcoming 2021 census will cast more light on this.

Decadal growth reached its zenith in 1991-2001, with an increase of 18.23 crore, up from 16.31 crore in 1981-91. In 2001-11, decadal growth stabilised to 18.21 crore, slightly fewer than the previous decade. CRS data shows decadal growth is expected to reduce in the 2011-21 decade to roughly 17.8 crore.

Decadal growth rate, on the other hand, peaked back in 1961-70 at 24.8%, and has steadily decreased ever since, which means that the population has been growing slower and slower after 1971. Growth slowly reduced to 21.5% in 1991-2001, and then rapidly dropped to 17.7% in 2001-11. With the population projection based on CRS data, it looks like decadal growth rate might plummet to 14.7% in this decade. Without a doubt, India’s population is ageing.

The future of all communities lies in its children. India was always pegged as the recipient of the demographic dividend, but data shows we will soon lose that advantage. The accompanying graphic shows the number of children between the ages of 0 and 6 years in the census years 1991 to 2011. This number rose from 150 million in 1991 to 164 million in 2001, and then dropped to 159 million in 2011. Projections from the CRS data indicate that in 2021, India will have around 156 million children, a drop of 3 million from 2011.

The percentage of children to the total population, however, has been steadily decreasing, from 17.8% in 1991 to 13% in 2011. 2021 projections indicate this might fall to 11% soon. Fewer children being born means fewer children entering Class 1, and, ultimately, fewer people entering the workforce.

At the rates fertility and population growth are dropping, India’s population may stabilise faster than expected. We can expect a peak soon, followed by a gradual decline. With improved lifespans, we are soon going to have a large ageing population, supported by a gradually-shrinking workforce. These trends indicate that many areas of our economy are going to be affected imminently, and must be given special attention—from staffing primary schools and teacher training, to improving workforce productivity and instituting special programs for the 60+ age groups.

India’s policymakers must commission a detailed demography study that brings together different aspects like fertility, births and deaths, school enrolment, workforce participation, and so on. This study will provide a solid foundation on which to make the necessary policy changes, and investments as India grows to a $5 trillion economy.

Pai is Chairman, Aarin Capital & Holla is Technology Fellow, C-CAMP. Views are personal. 

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